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Rwanda Payment System Strategy
Towards a cashless Rwanda | 2018-2024
2
CONSULTATION GROUP
Government Agencies
Capital Market Authority (CMA)
Ministry of Finance and Economic Planning (MINECOFIN)
Ministry of ICT and Innovation (MINICT)
National Bank of Rwanda (BNR)
Rwanda Cooperative Agency (RCA)
Rwanda Development Board (RDB)
Rwanda Information Society Authority (RISA)
Rwanda Utilities Regulatory Authority (RURA)
Financial Institutions
AB Bank Rwanda Limited
Access Bank Rwanda Limited
Bank of Kigali Limited
Banque Populaire du Rwanda Limited
COGEBANQUE Limited
Crane Bank Rwanda Limited
Ecobank Rwanda Limited
Equity Bank Rwanda Limited
GT Bank Rwanda Limited
I&M Bank Rwanda Limited
KCB Rwanda Limited
Mobile Network Operators, Payment Services Operators and Payment Services Providers
Airtel Rwanda Limited
MobicashRwanda Ltd
MTN Rwandacell Limited
RSwitch Ltd
Tigo Rwanda Limited
Visa Rwanda Ltd
Other stakeholder
Association of Microfinance Institutions in Rwanda (AMIR)
Ngali Holdings/ RwandaOnLine Ltd
Rwanda Bankers Association (RBA)
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Executive Summary .......................................................................... 7
High-level Snapshot of the 5 key strategies and their components. ...................... 8
1.0 Introduction ............................................................................. 13
1.1 Key Objectives of the National Payment System Strategy ......................... 13
1.2 Global and Regional Developments in Payment Systems ........................... 13
1.2.1 Global payments outlook ................................................................. 13
1.2.2 Regional Landscape ........................................................................ 15
2.0 Rwanda Payment System ........................................................ 17
2.1 Overview of the Rwanda Payment System .............................................. 17
2.1.2. Financial Service Providers, Intermediaries and Government Agencies .... 18
2.2 Interoperability ................................................................................... 20
2.3 Performance of the Rwanda National Payment System ............................. 21
2.4 Payment acceptance infrastructure in the EAC and other economies .......... 25
2.5 Rwanda’s economy: From cash-centric to cashless ................................... 26
3.0 Challenges in the current Rwandan Payment System ............. 27
4.0 Rwanda Payment System Strategy ......................................... 30
4.1 National Payment System Strategy ........................................................ 31
4.2 Objectives of the Rwandan National Payment System .............................. 31
4.3 The five strategies of the RNPS framework ............................................. 32
4.3.1 Strategy 1: Enhance the existing oversight, legal, institutional framework
and capacity of the national payment system................................................ 32
4.3.2 Strategy 2: Facilitate the transformation of Rwanda into a cashless
economy .................................................................................................. 38
4.3.3 Strategy 3: Foster an enabling environment for innovation in the payment
system 43
4.3.4 Strategy 4: Enhance access to and inclusion in the national payment
system 46
4.3.5 Strategy 5: Enhance the efficiency of payment systems ...................... 49
Annex I: Implementation plan / performance indicators ............... 53
Annex II: Consultative Process for the RNPS .................................. 53
Annex III: Achievements of RNPS to-date ...................................... 54
Annex V: Pillars of a Robust National Payment System .................. 59
Annex VI: G-20 Financial Inclusion Indicators ............................... 61
Bibliography ................................................................................... 63
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List of Tables
Table 1: Levels of Interoperability between various payment channels .....................................20
Table 2: Data on card based payment ......................................................................................21
Table 3:% of Adults with Active Registered MM Accounts per MNO, December 2016 ..............25
Table 4: Number of POS 100,000 adult population ...................................................................25
Table 5: Number of POS per “000” of debit cards .....................................................................25
Table 6: Percentage of cashless transaction in developed and emerging countries ..................25 Table 7: Details of Strategy 1.A .................................................................................................33
Table 8: Details of Strategy 1.B .................................................................................................36
Table 9: Details of strategy 2 .....................................................................................................38
Table 10: Details of Strategy 3 ..................................................................................................43
Table 11: Details of Strategy 4 .................................................................................................47
Table 12: Details of Strategy 5 ..................................................................................................50
Table 13: Highlights of the Rwandan Retail Payment Landscape 2008-2016 ............................55
List of Figures
Figure 1: Global Payments Outlook by 2023 .............................................................................13
Figure 2: Year-on-Year growth of ATM, POS, and POS transaction volumes (Jan-Dec) ...........22 Figure 3: Growth in value of ATM and all POS transactions (June to May) ...............................22
Figure 4: Growth in subscribers (non-unique) across mobile payments, m-banking and i-banking
(Jan – Dec) ...............................................................................................................................23
Figure 5: Comparison of volumes across mobile payments, m-banking and i-banking (Jan-Dec)
.................................................................................................................................................23
Figure 6: Comparison of values across mobile payments, m-banking and i-banking (Jan-Dec) 24
Figure 7: Structure of the National Payment System Strategy ...................................................30
5
List of Abbreviations
ACH Automated Clearing House
AFR Access to Finance Rwanda
AMIR Association of Microfinance Institutions in Rwanda
AML Anti-Money Laundering
ARPU Average Revenue Per User
ATM Automated Teller Machines
ATS Automated Transfer System
B2B Business to Business
B2G Business to Government
BIS Bank for International Settlement
BNR National Bank of Rwanda
CAGR Cumulative Aggregate Growth Rate
CBN Central Bank of Nigeria
CFT Combating the Finance of Terrorism
CICO Cash In, Cash Out
CPMI Committee on Payments and Market Infrastructures
CPSIPS Core Principles for Systematically Important Payment Systems
CSD Central Securities Depository
DFS Digital Financial Services
DLT Distributed Ledger Technology
EAC East African Community
EAPS East Africa Payment System
EFT Electronic Funds Transfer
EMV Europay, MasterCard, Visa
FII Financial Inclusion Insights
Fintech Financial Technology
FSDP Financial Sector Development Program
GDP Gross Domestic Product
GNI Gross National Income
GoR Government of Rwanda
GPFI Global Partnership for Financial Inclusion
G2P Government to Person
ICT Information and Communication Technology
KPI Key Performance Indicator
MFI Microfinance Institutions
MFS Mobile Financial Services
MM Mobile Money
MNO Mobile Network Operator
MoU Memorandum of Understanding
NFC Near Field Communication
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NNSS National Net Settlement System
NPS National Payment System
NPSC National Payment System Council
OTC Over the Counter
P2G Person to Government
P2P Person to Person
PFMI Principles for Financial Market Infrastructure
PFMI Principles for Financial Market Infrastructure
POS Point of Sale
PSO Payment Service Organization
PSP Payment Service Provider
RDB Rwanda Development Bank
RIPPS Rwanda Integrated Payment Processing System
RNPS Rwanda National Payment System
RPS Rwanda Payment System
RRA Rwanda Revenue Authority
RTGS Real Time Gross Settlement
RURA Rwanda Utilities Regulatory Authority
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Executive Summary
The Rwanda National Payment System (RNPS) Strategy 2018 – 2024 reaffirms the commitment
of the National Bank of Rwanda (BNR) and the Ministry of Finance and Economic Planning’s
(MINECOFIN) commitment to encourage the use of electronic payments by all residents of
Rwanda, to achieve a cashless society. The vision of the RNPS, its five strategic pillars and
accompanying implementation metrics act as a strong guide towards accomplishing a cashless
economy, and a financially included population.
Evolution and achievements of Rwanda’s national payment system:
The Rwanda Payment System Strategie serves as a guide for the Rwanda payment industry,
including regulators, public and private sector players to promote the continued development and
modernization of the Rwanda Payment System (RPS).
The objectives and goals of the Strategy are in line with and crucial to meeting the economic
targets indicated in various national strategic plans, including Rwanda Vision 2020/2050;
Economic Development and Poverty Reduction Strategy II 2013 - 2018 (EDPRS II); and Financial
Sector Development Program II (FSDP II) 2012. Specifically, the strategy will guide the
Government of Rwanda and industry stakeholders to lead and contribute to the following:
1. Accelerate the rate of economic growth and empower Rwandans towards meeting the
country’s vision of attaining middle-income status;
2. Facilitate a cashless economy by promoting e-payments;
3. Drive financial inclusion to meet the country’s commitment of 100% of adults in the formal
financial system by 2020;
4. Create an interoperable payment landscape with an enabling environment for product and
service innovation, which provides affordable payment services to Rwandans;
5. Develop a payment system that is safe, reliable, and efficient for all participants in the
ecosystem.
Following the development of the Rwanda National Payment System Strategy (2008), Rwanda’s
payment landscape has experienced significant improvement over the past several years. The
design and implementation of the Rwanda Integrated Payment Processing Systems (RIPPS) in
2011, which drove the automation of payment transfers and provision of real time settlement of
payment transactions, was one of the several achievements of the Rwandan payment system
over the past decade. Additionally, between 2008 and 2016, uptake of retail electronic payments
(e-payments) increased dramatically to constitute over 20% of the country’s GDP. Participants in
the payment system expanded from nine banks to 20 different players, including banks, mobile
network operators, and microfinance banks. Visa and MasterCard established their presence in
the country, joining RSwitch as one of the country’s two main switches; and the number of
Vision: To build a cashless Rwanda through a world-class payment system that is secure,
reliable, efficient, scalable, innovative, and promotes financial inclusion.
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Automated Teller Machines (ATMs) and Point of Sale (POS) throughout the country expanded
significantly.
To maintain the momentum towards further development, the National Payment System visioning
and strategy exercise was commissioned, building on the strategy established in 2008. This
document, titled Rwanda Payment System Strategy is the result of this exercise. The vision of
the national payment system (highlighted above) is to build a cashless Rwanda through a world
class payment system. The five key strategies outlined in section IV of this document detail out
how various parts of this vision can be attained by 2024.
High-level Snapshot of the 5 key strategies and their components.
I. Enhance the oversight, legal and institutional framework of the national payment system
Sub-Strategies Key Action Steps Key Agencies responsible
Time-Frame
1.A Review existing
legal framework
and enhance human
capacity of
regulators (BNR,
NIDA, CMA, RURA)
Review legal and regulatory framework to ensure it adequately reflects current and potential future needs of the payment system. The review will investigate how to effectively support and regulate innovative and emerging technologies. A feasibility study into the issuance of fiat cryptocurrency will also be conducted.
BNR Medium Term (up to 2020)
Monitor implementation of the and assess the impact of regulatory framework (including regulatory sandboxes) for innovative products accelerating time to market.
BNR, MINECOFIN, RURA
Short to Medium Term (up to 2020)
Development of a
comprehensive cyber security
framework that provides for a
secure, reliable and resilient
payment system.
RISA, BNR, RURA, MINICT
Short Term (by 2019)
Consumer protection laws in
financial services are in place
and Quality of Service (QoS)
and Quality of Experience (QoE)
are built into consumer
protection laws.
BNR, RURA Medium Term (2020)
Establish a data protection
law
NISR, MINECOFIN, MINIJUST
2020
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1.B Enhance the
payment institutional
framework through
cooperation among
domestic and
international
regulators
Ensure close collaboration and
alignment of National regulators
and clear separation
responsibilities.
Engage with EAC partner states
to ensure alignment around
regional integration and cross-
border payments.
BNR, RURA,CMA BNR, and other EAC partner states.
Short to medium Term (up to 2020) Continuous.
II. Facilitate the transformation of Rwanda into a cashless economy
Sub-Strategies Key Action Steps Key Agencies responsible
Time-Frame
2.A. Increase
footprint of
electronic
transaction
infrastructure
Number of digital payment acceptance points increases at least 15 times from 21.6 per 100,000 adults to 324
BNR MINECOFIN Private Sector (Banks, Non-banks & merchants)
Long Term (by 2024)
80% of adult population that have digital payment methods (MFS or Cards)
Banks,MNOs,MINICT,RDB,Payment industry, RRA,PSF
Long Term (by 2024)
Value of electronic payment to GDP is at 80%G
BNR, MINECOFIN, MINICT, RDB, payment industry, RRA, PSF
Long Term (by 2024)
Review taxation policies regarding e-payment transactions to encourage the usage.
MINECOFIN, RRA, BNR, RDB, MINICT and payment industry
Short to Medium Term (up to 2020)
2.B Leverage
government
payments to
promote growth and
innovation within
retail payment
infrastructure
Develop a cashless policy for
government transactions
ensuring that 100% of all
payments made by the
government (G2P, G2B, G2G)
are digitized.
BNR, MINECOFIN Short Term (up to 2018)
Digitize backend processes and
payments for all payments to and
from government; 100% of all
payment use-cases
RISA, MINECOFIN, RRA, BNR
Long Term (2024)
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100% of all payments to the
government are made digitally
(P2G, B2G)
RISA, MINECOFIN, RDB, RRA, BNR
Long Term (2024)
2. C Increase
awareness and
education of e-
payments among
Rwandans and
encourage
innovative business
models that offer a
strong value
proposition for
merchants and
consumers to use
digital payments.
Develop a financial literacy
strategy regarding e-payments
BNR, MINECOFIN, associated ministries and private sector
Short Term (up to 2018)
Incentivize merchants and
consumers to adopt digital
payments (lower MDRs, tax-
credits or rebates).
MINECOFIN, BNR, RDB, payment industry
Medium to Long Term (up to 2024)
Encourage low cost business
models and solutions that
accelerate payment adoption.
BNR, MINECOFIN, RDB, payment industry
Medium to Long Term (up to 2024)
III. Foster and enabling environment for innovation in the payment system
Sub-Strategies Key Action Steps Key Agencies responsible
Time-Frame
3.A Enhance
collaboration
between
stakeholders while
promoting
competition
Interoperability: Examine the current state of interoperability and evaluate business models that can sustainably accelerate the flow of funds across all payment instruments. This should result in interoperability across all payment issuers, irrespective of payment instrument (bank to bank, bank to wallet, wallet to bank, MFI to bank and wallet and reverse).
BNR, MINECOFIN, NPSC, RURA Payment industry
Medium to Long Term (up to 2024)
Open Application Programming
Interfaces (APIs): Drive competition, innovation and collaboration between banks, non-banks and other third parties through policies and business models that allow for open,
BNR, MINECOFIN, NPSC, RURA Payment industry
Medium to Long Term (up to 2024)
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secure and reliable exchange of information.
Study on number / data
portability: Commission and finalize a study on the implications of number portability on consumers’ financial transactions and histories.
RURA, BNR, MINECOFIN
Medium Term (by 2019)
3.B. Utilize regular
research and
surveys to measure
and inform
stakeholders on
development of
payment system
Periodic (every 3 years) statistically relevant demand side surveys to assess the level of adoption of e-payments, reliability and security of payment systems and opportunity areas.
BNR Continuous
Assess the potential impact of new technologies such as DLT, the Internet of Things (IoT), etc….
BNR, RURA,
CMA Medium 2020
3.C. Support Fintech
companies promote
innovations that
allow for better
access, adoption
and usage of
financial services
and products.
Establishment of a fintech incubator/accelerator programs that nurture industry-wide fintech solutions
MINECOFIN, BNR, MINICOM, MINICT, RDB, PSF, payment industry
Continuous
Establish seed and scale capital (through angel investors, Venture capital and private equity) for Fintech companies to develop proof of concept and market test easily.
MINECOFIN, MINICOM, MINICT, RDB, Financial Institutions
Attract and develop talent in Financial Technology domains
MINICT, MINICOM, RDB, PSF
IV. Enhance access and inclusion of institutions within the national payment system
Sub-Strategies Key Action Steps Key Agencies responsible
Time-Frame
4.A Enhance access
to and inclusion
within the national
payment system
Facilitate the participation of 100% of E-money issuers, and 100% of MFIs and SACCOs participate in the NPS by 2024.
BNR Long Term (up to 2024)
4.B. Adapt the
pricing structures of
various payment
Transparent and fair pricing across payment instruments and channels. Prices are made available to the public.
BNR, NPSC Short Term (by 2018)
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instruments to
enhance
affordability, fair
pricing, and
transparency in the
market
4.C. Provide
payments products
and services that are
affordable and meet
consumers’ needs
Develop compelling DFS products (savings, insurance, credit and other payment use-cases) that increase customer stickiness with digital financial services.
BNR, Payment Industry
Long Term (up to 2024)
Increase the smartphone penetration in the country to 70%
RURA, MINICT, BNR, Banks and MNOs
Long Term (up to 2024)
V. Enhance the efficiency of payment systems
Sub-Strategies Key Action Steps Key Agencies responsible
Time-Frame
5.A. Ensure
reliability and
robustness of e-
payment
infrastructure
Develop a directive establishing standards for technological infrastructure and security of e-payments (ATM, POS, MFS)
RURA, BNR, payment industry
Short Term (by 2018)
Improve internet (3G/4G) accessibility in terms of data coverage, quality and affordability
RURA, MINICT, RISA, ISPs
Short Term (by 2019)
Establish a cyber resilience program based on the National Cyber Security Strategic Plan
RISA, MINICT, BNR, RURA, payment industry
Short Term (by 2019)
Carry out business process re-engineering exercises to streamline and automate government-backend activities to enable integration and interoperability between public sector systems.
MINICT, MIFOTRA and RISA
Short Term (by 2021)
5.B. Promote
efficiency in RIPPS
internal processes
for clearing and
settlement
Real time clearing for small value payments. RIPPS to upgrade to 24/7 days operations
Clearing system operator, BNR, payment industry
Short Term (by 2018)
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1.0 Introduction
1.1 Key Objectives of the National Payment System Framework and Strategy
The key objectives of the national payment system framework and strategy are as follows:
1. Economic Growth: To use the payment system to accelerate the rate of economic growth
and empower Rwandans in achieving the country’s vision of a middle-income country by
2020 and high income by 2050.
2. Cashless Economy: To facilitate a cashless economy by promoting e-payments.
3. Financial Inclusion: To drive financial inclusion to include 100% adults in the formal
financial system by 2020.
4. Enabling Environment for Innovation: To create a payment landscape with an enabling
environment for product and service innovation, which provides affordable payment
services to Rwandans.
5. Robust Payment System: To develop a payment system that is safe, reliable, and
efficient for all participants in the ecosystem.
1.2 Global and Regional Developments in Payment Systems
1.2.1 Global payments outlook
Globally, payments systems are a pervasive point of discussion, not only among traditional
financial institutions, but also among MNOs, Payment Service Providers (PSPs), government
institutions, and development agencies. The proliferation of non-financial institutions in the
payment landscape requires regulators to stay abreast of various developments in this sector to
ensure that the national payment system supports innovation in payment products and services
without compromising the safety, effectiveness, and efficiency of the payments ecosystem.
Innovations in the payments industry are driving competition among traditional players and
encouraging new entrants into the industry. Global payments are expected to continue to grow
significantly between 2013 and 2023, mainly driven by retail (low-value) payments in volume and
revenues, and by wholesale (large-value payments) in value.1 North America, Western Europe,
and Asia-Pacific (emerging) will represent the biggest markets in 2023, while the rest of the world,
which includes Sub-Saharan Africa, will grow by 141% in volume, 161% in value, and 187% in
revenue.
Figure 1: Global Payments Outlook by 2023
1Boston Consulting Group. Global Payments 2014 - Capturing the Next Level of Value. Report. Boston: Boston
Consulting Group, 2014. Document.
14
Source: Data extracted from BCG Global Payments Outlook
These figures highlight the large scale of the opportunities for providers to deploy innovative
payment solutions to meet the demands of end users. A clear example is the recent boom in
mobile wallet (mWallet) payments – a payment method less than a decade old, but which has
established itself as a critical component of most national payment ecosystems.
1.2.1.A New players and technologies are entering the ecosystem
Payments is a popular arena for innovation. Some of the world’s largest digital companies (Apple,
Google, Amazon, Facebook, PayPal), as well as hundreds of smaller financial technology
(Fintech) companies are introducing innovative payment products and services. Examples
include digital wallets, in-app payments, and app-based virtual banks.
1.2.1.B Disruptive technologies may impact the payment ecosystem
Innovative and disruptive technologies are emerging that offer alternatives to traditional payment
infrastructures and solutions. Several industry players are exploring the possibility of using
technologies such as blockchain in place of traditional methods of payment, information storage,
settlement, etc.
1.2.1.C The world is moving to faster payments with more information
Many payment systems around the globe are undergoing fundamental changes to reflect the new
realities of digital commerce, especially when it comes to the speed at which payment requests
are processed. Convenience, security, universal access, financial inclusion of previously
unbanked populations, adoption of international standards, enhanced remittance capacity for
Business-to-Business (B2B) transactions and low cost are other important characteristics of
emerging interbank payment systems.
1.2.1.D Universal financial inclusion
This document defines financial inclusion as indicated by the G-20’s Global Partnership for
Financial inclusion (GPFI). GPFI defines financial inclusion along three dimensions – (a) access
to financial services, (b) usage of financial services, and (c) the quality of the products and service
delivery. The document also lists the indicators that constitute each of the above dimensions.
71
35
87
1043
North America
Western Europe
Asia-Pacific (mature)
Eastern Europe
Rest of world
Middle East and North Africa
Latin America
Asia-Pacific (emerging)
+77%
2023
706
121
252
86
52 16
22
2013
398
92
137
48 26
7
6,9809,748
+90%
2023
777,019
144,931
171,089
78,620
67,359 18,088
34,314
72,921
189,698
2013
409,814
101,674
104,229
56,246
28,760
32,904
69,273
143
273
196
727
31
+112%
2023
2,137
215
460
143
185
48 85
2013
1,010
152
293
94 83
17
Volume (Billions) Value (USD Billions) Revenue (USD Billions)
15
Payments and payment services are an integral part of the overall package of financial services.
Formal payment services also produce important data trails, that can not only facilitate access to
follow on financial products services, but, in many cases, can be critical to the efficient provision
of those services. The global goal is to ensure adults world over have access to transaction
accounts to store money, send and receive payments as the basic building block to manage by
2020.
1.2.1.E Enabling regulatory approach
Regulators are shifting focus to meet the demands of the changing global payments landscape
and protect consumers. Governments are stimulating adoption of noncash payment instruments,
removing barriers to competitions for both banks and other players, and enhancing security
requirements for both mobile and online payments.
1.2.1.F Global standards are emerging, improving local competitiveness
Much of the value of modernization is delivered by creating the capability for payment-related
information to travel with the payment. The inclusion of payment information reduces the need for
labor intensive processes such as reconciliation, and supports automated processing. ISO 20022
is a multi-part international messaging framework that supports including standardized payment-
related information along with payment instructions. ISO 20022 has emerged as the global
payments messaging standard, and is considered an essential component of any payments
infrastructure modernization. The widespread adoption of ISO 20022 will also support
international interoperability of payments systems.
1.2.2 Regional Landscape
Africa’s payment landscape has undergone significant changes over the past decade, especially
with the proliferation of non-financial institutions such as MNOs, Payment Service Operators
(PSO) or Payment Service Providers (PSP), and retailers into the payment industry. In addition,
focus on branchless banking initiatives such as mobile banking, transaction and acceptance
terminals, and internet access is now predominant in many African countries. MFS and agent
banking, in particular, have become established payment channels through which customers in
the African continent conduct remittance and payment transactions. Per GSMA’s State of the
Industry Report (SOTIR), there were over 227 million registered mobile money accounts in 2016,
and over 80% of the region has deployed mobile money services.2 Other important trends in the
payment landscape include the convergence of e-commerce and mobile payments through the
uptake of smart phones and mobile applications; the adoption of e-payment by government
organizations to capture revenue (e.g. taxes and utilities) and disburse payments (e.g. pension
and social benefits); and the growing cross-border, low-value e-payment market, such as
remittances, international bill payment, e-commerce, and trade services. These trends further
underscore the critical need for central banks to take a proactive approach to facilitate a payments
landscape that is safe, reliable, efficient, and affordable for end users.
As said earlier, governments around the world are prioritizing efforts to move from a cash-based
to a cashless economy as one of the key means to drive financial inclusion. 19 countries in Sub-
Saharan Africa signed the Maya Declaration, a commitment to the economic and social potential
of the 2.5 billion people un-banked through financial inclusion. Access to payment services
2GSMA, State of the Industry Report, Decade Edition 2006 - 2016
16
remains fundamental to achieving the Maya Declaration targets, particularly given the potential
that affordable and effective channels (such as agent banking and MFS) have for bringing
un(der)served segments into the formal financial economy.
The next section gives a description of the Rwanda National Payment System and the current
initiatives by stakeholders within the payment ecosystem.
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2.0 Rwanda Payment System
2.1 Overview of the Rwanda Payment System Rwanda’s payment landscape is comprised of multiple constituents, which can be classified into
three groups: networks, providers, and platforms.
2.1.1 Networks
2.1.1.A Regional Platform Networks
Rwanda’s banking system is connected to the East African Community (EAC) through the East
African Payment System (EAPS)3 for cross-border, bank-to-bank, wholesale transactions. For
retail transactions, Rwanda’s national payment system is connected to regional and global
payment platforms through Rswitch, MasterCard and Visa to allow transactions to occur outside
of Rwanda’s borders. Cross border mobile transfers are emerging through bi-connections
between MNOs or via aggregators at the regional level.
2.1.1.B Local Payment Platforms and Networks
The BNR has taken a primary role in developing the payment industry by facilitating payment
services between banks through the RIPPS. The RIPPS consists of the Automated Transfer
System (ATS), through which RTGS and ACH are offered, as well as CSD, which is designed to
provide depository services to the financial markets. The RIPPS serves as a national hub to
support interoperable payments.
Real Time Gross Settlement (RTGS)
As a component of the automated transfer system, the BNR launched the RTGS system in
2011. The RTGS system, which enables real-time settlement of large-value payments and
provides for accurate reflection of transactions, is critical to efficiency of Rwanda’s payment
system. The BRN’s RTGS system is connected via EAPS to the RTGS of other countries of
the EAC (specifically, Kenya, Tanzania, and Uganda). All card based payment services are
settled in central bank money through RTGS.
Automated Clearing House (ACH)
ACH is the second component of the ATS, which deals with payments by cheque and multiple
credit transfer.
Electronic Cheques
The BNR along with banks is currently embarking on a modernization of cheque processing
system by implementing the cheque Imaging System. Magnetic ink character recognition
(MICR) standards banks have already been established and participants and started using
the standardized cheques. The BNR however, is actively looking at phasing out cheques for
3 EAPS is a regional payment system, which allows banks to transfer or receive funds through their respective Central Bank’s Real Time Gross Settlement System (RTGS) with other countries’ RTGS through EAPS. Kenya, Uganda, Tanzania, Rwanda and Burundi are all member of EAPS, however Burundi is not yet operational.
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government transaction following the establishment of internet banking for government
transactions.
Card Payment System
Historically, all banks in Rwanda issued ATM cards that were branded by RSwitch as
“SMARTCash Card.” The cards, issued by RSwitch member banks, can be used on both
ATMs and POS terminals of RSwitch member banks. After the arrival of Visa and MasterCard
in Rwanda, many banks also became Visa and MasterCard issuers.
RSwitch
RSwitch (previously known as SIMTEL) currently serves as a Switch for local cards which
constitute 48% of the market share. RSwitch members include both issuers and acquirers of
debit cards. Additionally, RSwitch provides card management and ATM and POS operations
for 5 banks.
Visa
Present in Rwanda since 2008, Visa is an international payment scheme working with Rwanda
banks. Ten commercial banks and one microfinance bank are Visa members and can acquire
ATMs; among those three banks are POS acquirers and three are e-commerce acquirers; six
of 11 Visa members can issue debit, credit, and prepaid products (cards or mVISA) to their
clients. Visa has 41% of the market share.
Visa has offered membership to its Visa Network (VisaNet) to multiple banks within the
payment ecosystem. Visa member banks issue Visa-branded debit and credit cards and
accept Visa cards on their ATM and POS networks. Local transactions (where both issuer and
acquirer banks are domestic) are cleared locally in Rwanda Francs (RWF) using the National
Net Settlement System (NNSS)and are settled through RTGS.
MasterCard
MasterCard has also entered the market since 2015 and serves three banks (has around 10%
of the Rwandan card market share). MasterCard payment gateway is being used by Rwanda
Online to facilitate payment of government services through the Irembo platform.
2.1.2. Financial Service Providers, Intermediaries and Government Agencies
Mobile Network Operators (MNOs) and third party wallet providers
There are three MNOs in the market – Airtel Rwanda, MTN Rwanda, Tigo Rwanda- all of whom
offer electronic wallets and digital financial services. All electronic money (e-float) is balanced out
by equivalent cash in escrow accounts at local banks.
As of end December 2016, mobile network operators offered different services such as: cash-in,
cash-out, airtime purchase, electricity, water and fuel purchase, merchant payment, pull/push
transactions between bank and mobile network operators, saving, transfers (P2P,B2P, P2G,
cross border, international remittances) and school fees payment. Using mobile payment, one
can make cross border transfers in following Countries: Kenya, Uganda, Tanzania, Zambia, DRC,
19
Niger, Congo Brazzaville, Ghana, and Malawi. It is also possible to receive money from partner
Countries of World Remit, Western Union and Small World. The total number of registered mobile
accounts increased by 27% from 7,663,199 as at end-Dec 2015 to 9,735,694 at end-December
2016. In terms of MNO agent infrastructure, there were 577 agents per 100,000 adults or 34,620
agents in the country end of June 20164.
Several banks and MNOs have also developed bilateral partnership initiatives to offer(MFS).
Given the limited flow of funds across payment instruments issued by banks, MNOs and some
PSPs, banks have formed partnerships with MNOs that allow for push-pull services between a
bank account and a mobile-wallet (mWallet) account. Customers can pull money from their bank
accounts to their mobile wallets and vice-versa. However, these crisscrossing bilateral
relationships create inefficiencies within the payment system, and discussions are on-going to
enhance RSwitch’s capability to offer “any to any” transfer services.
Commercial Banks
The banking sector in Rwanda is comprised of 11 commercial banks and five microfinance banks
that offer core financial services to their clients, including savings, credit, cards, and alternative
delivery channels. As of December 2016, there were 400 ATMs, 1,885 POS machines, 746,458
debit cards, and 3,668 credit cards deployed by Rwanda’s banks.5 Three banks are providing
agent banking services with the total of 4,411 agents around the country. Note: agent exclusivity
(MNO or bank) is prohibited and all agents are non-exclusive.
Microfinance Institutions (MFIs) and Savings and Credit Cooperative Societies (SACCOs)
Rwanda has 61 MFIs, which serve a client base of 2.5 million customers. Additionally, there are
416 SACCOs, present in all districts in the country. These SACCOs serve 2.2 million people,
offering deposits and loans.
As of December 2016, only one of the MFIs offered e-payments, such as mobile banking and
debit/ATM cards. Although there are on-going initiatives by MFIs and SACCOs to partner with
banks and PSPs to offer e-payments, the limited technology infrastructure and organizational
capacity of the MFIs and SACCOs impedes their ability to fully participate in the payment system.
It is in that regards the Government and Association of Microfinance Institutions in Rwanda
(AMIR) have initiated projects to automate both SACCOs and MFIs though shared platform.
Payment gateway service providers and payment aggregators
The increasing growth of electronic payments, especially online payments, riding the growth of ecommerce and m-commerce transactions, has brought to the fore the increasing role and importance of entities that facilitate such online payments such as payment gateway providers and payment aggregators6. The central bank in Rwanda is working on guidelines that will clearly define and detail specific aspects of the functioning of these intermediaries, particularly payment aggregators. In Rwanda, aggregators enable utility, transport, m-commerce, person-to-government and other types of payments across multiple financial service providers.
4BNR Annual Supervision reports 5 BNR Statistics, 2016 6India Payment Systems Vision 2016
20
Government Agencies
The Government of Rwanda (GoR) has taken an
active role in driving the uptake of e-payments by
launching initiatives to digitize government
payments, which are currently largely cash and
paper-based. As shown in the payment grid above (highlighted in green), there are two types of
payments (P2G, B2G) made to the government and three that are made by the government
(G2P, G2B, G2G). The GoR has successfully digitized nearly all G2B and G2G payments.
However, the largest volume of payments in any market, are P2G payments (CGAP7) and while
the GoR is working towards digitizing these types payments8, there is a lot that still needs to be
accomplished in digitizing the backend process of various government departments to ensure a
truly end-to-end remote experience which includes payments.
For P2G payments, such as taxes, the Rwanda Revenue Authority (RRA) has introduced an
online system, and six banks are offering tax payments using electronic channels. The
Government of Rwanda, through the Rwanda Online Platform, has also made significant progress
in establishing an integrated public service platform that offers B2G and P2G services in the
country. The Rwanda Online platform is accessible to consumers via the internet and accepts
both card and mobile payments.
2.2 Interoperability
The Rwandan payments system currently has limited levels of interoperability for retail payment
transactions. Table 3 describes the extent to which interoperability exists in the market.
Table 1: Levels of Interoperability between various payment channels
Bank to Bank
Accounts Electronic POS ATMs Mobile
Real-time, inter-
bank transfers
initiated by bank
customers to
another bank’s
customers are not
operational;
Visa, MasterCard and
RSwitch9 provide
interoperability
between their member
institutions; most POS
acquirers acquire both
brands
Both Visa and
RSwitch provide
interoperability
between their
member institutions
Banks acquire
Visa, MasterCard
Between telcos,
mWallet to mWallet
transfer is non-
existent; discussions
among telcos to
interoperate are
underway
7Lessons from digitizing Global P2G payments: http://www.cgap.org/blog/series/digitizing-person-government-
payments-global-landscape-2016Lesson 8P2G payments typically fall under the classification of statutory payments (like taxes and fines), service payments
(for passport, driver licenses, school fees, tolls and more) and co-payments (like insurance). 9As of 2016, five banks issue RSwitch cards, while seven banks accept RSwitch banks on their ATMs. Six banks issue
Visa, while 8 banks accept Visa cards on their ATMs. Three banks issue MasterCards while 5 banks accept them. Three banks acquire merchants, allowing acceptance of cards via POS; three of these banks enable acceptance of
Visa, while two of the three bank enable acceptance of MasterCard.
P B G
Person (P) P2P P2B P2G
Business (B) B2P B2B B2G
Government (G) G2P G2B G2G
21
High-value
transfers are
possible through
RTGS
and RSwitch,
therefore ATM
interoperability is
almost 100%
Between telcos and
banks, mWallet-to-
bank and bank-to-
mWallet transfers
are currently
operational through
bilateral
relationships
between some
banks and telcos
There is a drive for further interoperability within the RPS and efforts to promote full-scale
interoperability within the various retail channels (ATM, POS, agent, mobile, and internet) and
across payment instruments are ongoing. Current arrangements are bilateral between providers,
which are not always optimal. However, an efficient payment system that allows for the seamless
flow of funds between various payment instruments – in a manner that is affordable and intuitive
to the end user, while making business sense to participating private sector entities - is needed.
The central bank is working towards balancing out the needs of the consumer and the business
realities of financial service providers in facilitating interoperability arrangements between issuers.
2.3 Performance of the Rwanda National Payment System
E-payments systems in Rwanda grew rapidly between 2012 and 2016 (see Figure 6), with most
growth (in terms of subscribers and value) attributable to mobile payments. Debit and credit cards
issuance recorded the slowest growth (CAGR of 29%), compared with mobile banking
subscribers (CAGR of 49%) and mobile payments subscribers (CAGR of 99%).
Below tables and graphs show the current state of payment acceptance and disbursement
infrastructure in the country, as well as the growth of e-payments across various channels
(source: BNR).
Table 2: Data on card based payment
Infrastructure 2010 2011 2012 2013 2014 2015 2016
No. of ATMs 84 167 292 333 354 380 400
No. of POS terminals
99 227 566 946 1,152 1,718 1,885
No. of POS terminals for bank
agents
- - - 491 1,009 1,422 1,026
No. of debit cards 41,377 115,200 389,269 487,498 638,869 657,904 746,458
No. of credit cards 172 516 418 845 2,540 3,485 3,668
22
Figure 2: Year-on-Year growth of ATM, POS, and POS transaction volumes (Jan-Dec)
Figure 3: Growth in value of ATM and all POS transactions (June to May)
(Values are in RWF billions)
39
3,0
88 1
,97
6,3
76
5,7
53
,16
3
7,7
74
,05
3
7,4
88
,70
7
7,5
05
,81
5
8,1
83
,11
6
20
,03
6
38
,44
0
63
,75
7
11
1,5
70
18
5,4
41
37
3,0
29
66
07
46
0 22
,42
5
29
8,8
35
48
2,9
45
82
7,1
30
99
0,0
70
2010 2011 2012 2013 2014 2015 2016ATM POS merchant POS Agents
0 50 100 150 200 250
2013
2014
2015
2016
POS transactions ATM
23
Figure 4: Growth in subscribers (non-unique) across mobile payments, m-banking and i-
banking10 (Jan – Dec)
Figure 5: Comparison of volumes across mobile payments, m-banking and i-banking (Jan-
Dec)
10 Internet banking
231,000639,673
1,440,541
2,538,651
6,480,449
7,663,199
9,735,694
0 155,986 297,537 412,007 659,712 828,799 980,671
0 0 3,411 8,969 29,840 36,597 43,047
2010 2011 2012 2013 2014 2015 2016
Mobile Mobile Banking Internet Banking
829,379 3,420,885
22,191,674
57,147,777
104,773,115
168,612,455
205,687,966
0 527,300 1,458,063 2,538,820 4,637,849 5,617,368 3,906,6420 1,493 10,036 89,260 312,260 556,152 460,363
2010 2011 2012 2013 2014 2015 2016
Mobile Mobile Banking Internet banking
24
Figure 6: Comparison of values across mobile payments, m-banking and i-banking (Jan-Dec)
In Rwanda, MFS represent the major driver of the volume of retail electronic transactions, as
consumers show preference for mobile payments over other channels. Finscope Rwanda 2016
revealed that the main channel used for DFS is mobile money with 95% of DFS users preferring
that channel over digital banking services at 21%.
Formal financial inclusion in Rwanda stood at 68% in 2016 while informal financial inclusion stood
at 21% (Finscope). Formal financial institutions issue digital payment instruments (like debit cards
or mobile wallets), while informal institutions typically don’t. When compared of the percentage
adults who are formally included, only 46% seem to be making use of the digital service, which is
low. Of the DFS users - 65% use them for remittances, 64% use DFS for payments (mostly
airtime), 44% are saving digitally, and only 11% for accessing credit11.
11FinScope 2016, Rwanda, Digital Financial Services in Rwanda
8,35551,024
161,808
330,378
691,477
1,093,4971,040,459
0 5,215 3,926 17,459 41,281 48,309 37,1640 708 12,746
117,147
332,959
581,163
1,014,077
2010 2011 2012 2013 2014 2015 2016
Mobile Mobile Banking Internet banking
25
Table 3:% of Adults with Active Registered MM Accounts per MNO, December 2016
Accounts Tigo MTN Airtel Total
Total Registered
(Incl. Functional
and Non-
Functional
accounts
3,921,069 3,673,472 777,152 8,371,693
Functional
accounts (Active
PINs)
2,824,339 2,761,529 444,095 6,029,963
Active accounts
for last 90 days 1,348,288 1,372,408 266,000 2,986,696
Rate of Active in
last 90 days of
those with
functional PINs
47.7% 49.7% 59.9% 49.5%12
Source: BNR
2.4 Payment acceptance infrastructure in the EAC and other economies
Comparative analysis of ATM transactions between Rwanda and other EAC countries (Kenya,
Uganda, and Tanzania) reveals that Kenya has the highest penetration of ATMs per adult (10.1
ATMs: 100,000 adults).
Analysis of the value of POS transactions across the EAC region shows that its uptake is generally
low. In Kenya, where POS penetration is highest (approximately 94 POS: 100,000 adults),
However, compared to countries with the highest percentage of cashless, POS penetration is very
low.
Table 4: Number of POS 100,000 adult population13
Rwanda Kenya Uganda Tanzania Mauritius Malawi India Brazil Sweden
POS 26.98 94. 11.21 12.57 647 15 69 3750 2241
ATM 5.7 10.16 4.55 6.04 45.55 6 19.71 114 40.53
Table 5: Number of POS per “000” of debit cards14
Rwanda Kenya Brazil India China Australia
POS / ‘000 debit card 2.5 2.03 14.8 2 12.5 33.2
Table 6: Percentage of cashless transaction in developed and emerging countries15
12 The Number is close the FinScope Survey. 13 Source: Bank of Tanzania; Central Bank of Kenya Bank of Uganda; National Bank of Rwanda 14Source: BCG Global Payment 2020 July 2016, CBK and BNR Websites 15Source: BCG Global Payment 2020 July 2016
26
Australia France USA Germany UK Brazil China Turkey Russia India
Cash-
less txn
91% 78% 76% 76% 75% 56% 53% 40% 31% 22%
2.5 Rwanda’s economy: From cash-centric to cashless
Data from Rwanda’s national payment system and comparisons with other countries within the
EAC and external to the region demonstrate that Rwanda is still heavily reliant on cash. There
are many reasons for limited electronic uptake by consumers, government and merchants.
Chapter 3 details out some of the key challenges while Chapter 4 lays out the strategies that
aim to leapfrog Rwanda into a cash-lite economy in the next 5 years.
Electronic Payment Acceptance Penetration
Co
nsu
mer
Ad
op
tio
n
Transition (Limited Merchant
Acceptance)- Relatively high electronic
payment instrument penetration but limited
acceptance.
Electronic payments are still not used for
every day spend (e.g. UAE, Poland,
Malaysia, etc.)
Electronic- High penetration of
electronic payment instruments
penetration and high acceptance.
Electronic payments are top of wallet,
though cash exists (e.g. Sweden, South
Korea, US, etc.)
Cash-Centric – Low electronic payment
penetration and limited electronic
payment acceptance penetration.
Heavily cash-dependent. Displays early
stages of electronic payment ecosystem
(e.g. India, Rwanda, Indonesia, etc.)
Transition (Limited Consumer
Adoption)- High acceptance but low
electronic payment instrument
penetration.
Consumer resistant to electronic
payments. Need to demonstrate utility of
electronic payments (e.g. Japan, Spain,
Italy, Greece.
High Low
Low
High
27
3.0 Challenges in the current Rwandan Payment System
A robust and reliable payment ecosystem is fundamental to achieving the strategic goals for
Rwanda’s social and economic development, as set forth in various national plans including
Rwanda Vision 2020/2050; Economic Development and Poverty Reduction Strategy II 2013 -
2018 (EDPRS II); and Financial Sector Development Program II (FSDP II) 2012, Smart Rwanda
masterplan. However, there are several challenges within the Rwandan payment ecosystem that
hinder the achievement of these strategic goals. These challenges include:
1. Non-contemporary regulatory framework for the payment system: Current laws and
regulations especially those related to the retail payment were established in 2010 and
are not reflective of the current realities of the Rwandan financial market. The development
of innovative payment solutions, new channels, products and/or business schemes have
modified the structure of the market and the delivery of payment services; thus, requiring
relevant and proportionate regulatory framework.
2. Limited interoperability between providers, specifically in MFS systems which have the
highest volumes of payments. Limited interoperability between card and mobile payment
systems restrains the operational and economic efficiency of the national payment system,
as well as end consumer affordability. Additionally, seamless interoperability between all
bank and wallet accounts, which is critical to facilitating electronic payments, is not in
existence.
3. Cash-dominated economy: A cash dominated economy exacts an invisible but very real
cost on governments, businesses and households. Cost of cash for countries that are
dominant users of cash can easily exceed 1% of GDP16 and perpetuates a shadow
economy. Like Rwanda, many developing countries are cash-dominant. Cash is
expensive but users and merchants are not aware of it. The shift from cash to digital will
require at the very least a combination of 3 things – (a) Significant portion of the population
own and use a digital store of value, (b) a high density digital payment acceptance
infrastructure exists, and (c) there are incentives for customers and merchants to shift to
digital payment methods.
4. Gaps in network infrastructure: Currently, there are a number of gaps in network
infrastructure, which include: unstable back-end and front-end infrastructure of providers;
low penetration of smart phones which limit the usage of innovative channels; limited
mobile and electricity coverage especially in rural areas, which reduces the number of
places where customers can utilize POS and ATMs; and frequent network failures and
problems that arise during the use of e-payments, which reduces customer confidence in
digital payment channels.
5. Payment digitization cannot occur without backend digitization: The first step
towards payment digitization is digitizing the backend. This includes (but is not limited to)
digitizing manual processes, integrating with various financial service providers,
developing an intuitive customer interface and experience, building reconciliation and
16 McKinsey on Payments: Forging a path to payment digitization, page 4
28
acknowledgment systems. Accepting or disbursing digital payments is nearly always the
end piece of this puzzle. Various government agencies are working towards digitizing their
processes to enable digital payment acceptance and disbursement, beginning with the
revenue authority that is championing e-payments for tax collections. Similarly, other
government agencies responsible for collection of fines, levies, social benefit contributions
for pension, and more are working towards shifting from paper based to digital processes.
However, this process is resource intensive and the transition from paper to digital is not
always seamless.
The above image provides a time and direct cost estimate that a Rwandan citizen used to
or still incur(s) to obtain a birth certificate (depending on the location) prior to IREMBO
services. The purpose of the example is to put a spotlight on the issue raised above –
payment digitization is only part of the digitization process. In the case of birth registration
example above, if a guardian is required to physically be present to process
documentation, the incentive to make a remote payment hardly exists. Convenience is a
key edge that remote payments bring. However, if the end-to-end transaction process is
not digital, that edge is lost and so is the reason to make the payment digitally17.
6. Low consumer access to electronic transaction and payment services: As
mentioned in point 3 above, moving from cash to digital, at a basic level requires a
combination of 3 things –(a) significant portion of the population own and use a digital
store of value, (b) existence of a high density digital payment acceptance infrastructure,
and (c) incentives for customers and merchants to shift to digital payment methods.
Currently, only 12% of the population has debit cards while 38% have mobile money
accounts (note: these two sets overlap i.e. nearly the entire banked population has a
mobile money account). The payment acceptance infrastructure on the other hand is at
27 POS machines for every 100,00 individuals, while for cash-lite countries like Sweden
the payment acceptance penetration is nearly 100 times that at 2241 POS machines for
every 100,000 individuals.
17 Source: CGAP, Karandaaz, Global Landscape Study on Digitizing P2G payments
Estimated time cost: 1.5 to 6 hours | Estimated direct cost: 500 to 1500 RWF
29
High Tax levies on payment acceptance infrastructure can act as a disincentive to
adopting and accepting digital payments. Incentives that lead to adoption and usage of
digital payments both for merchants and customers are necessary to ensure the shift from
cash to digital.
Note -Non-traditional acceptance points: It is important to note that the payment space
is constantly evolving and this includes payment acceptance technology. Near Field
Communication (NFC), QR code and internet based applications (apps), etc.have the
potential to upend traditional and costly payment acceptance infrastructure.
7. A large informal economy: In the recently concluded demand side Finscope 2016
survey, 51% of adults reported that they earned their income from farming, and another
37% reported that they earned money from casual labor. Except for formal sector salaried
workers (around 6% of adults), most adults earn their income in cash. If money is not
earned electronically, it is counter-intuitive for people to go register and cash into a digital
wallet or bank account especially when cash is universally accepted. Moreover, cash is
perceived to be free while banks accounts, mobile wallets and other digital store of value
have account or transaction fees. Earning money electronically, having an incentive to use
electronic value and a robust spend economy with enough electronic value acceptance
points are critical to Rwanda’s vision. A large informal economy can slow the uptake of
retail e-payments – which is currently at 22.6% of GDP to the desired goal of over 30% of
GDP by 2025.
8. Low levels of financial literacy: There is a direct relationship between education levels,
financial behavior and literacy. Adult literacy rate in Rwanda was at 68% in 2012 (National
Institute of Statistics Rwanda). While significant progress has been made in pushing
literacy levels upwards, with nearly 30% of the population illiterate, universal adoption and
usage of digital financial products is going to be a challenge in the short term.
30
4.0 Rwanda Payment System Strategy
This strategy document is guided by the analysis of the Rwanda context, global experiences as
well as the World Bank publication on developing a comprehensive national retail payment
strategy. This section of the document is structured as depicted in the graphic below.
Figure 7: Structure of the National Payment System Strategy
Vision
To build a world-class payment system that is secure, reliable, efficient,
scalable, innovative, cashless and promotes financial inclusion.
Key Objectives
Objectives of the National Payment System
Strategic Approach
Approaches that are imperative to the overall strategy.
Critical action
steps
Immediate action
steps that should be
considered to ensure
that each strategy
approach is
adequately
implemented.
Key
Indicators
Metrics that help
monitor and track
the progress of
strategy
implementation.
Success
factors
Factors that need to
be in place to ensure
the success of the
strategy.
Strategic Objectives
Overall strategies that must be implemented to
accomplish the key objectives
31
4.1 National Payment System Strategy
4.2 Objectives of the Rwandan National Payment System
The strategic objectives to achieve the above stated vision are as follows:
1. To use the payment system to contribute to the achievement of the country’s vision
of becoming a middle-income country by 2020 and high income country by 2050
Currently, Rwanda is a low-income country with Gross National Income (GNI) per capita
of USD 720 in 2017 (World Bank Estimate). Per Rwanda’s Economic Development and
Poverty Reduction Strategy II, the country must achieve a GNI per capita of USD 1,200
by 2020 and USD 12,000 by 2050.The country’s payment system can contribute to
empowering and increasing the economic status of Rwandans.
2. To facilitate a cashless economy by promoting e-payments
Rwanda’s retail electronic transactions currently account for 30.0% of GDP. Rwanda is
predominantly a cash economy, partly due to the challenges highlighted in section 3.0.
These include a huge informal economy that earns in cash, low ratio of electronic payment
acceptance points (27 POS machines for every 100,000 adults), and a lack of incentives
for merchants and customers to move from cash to digital.
The payment system vision and strategy intends to guide the transformation of Rwanda
into a cashless economy, with cashless retail transactions contributing to over 30% of
GDP by 2024.
3. To create an enabling environment for product and service innovation, which
provides affordable, effective and relevant payment services to Rwandans
Existing gaps in the regulatory environment may hinder innovation in the payment system.
The payment system vision and strategy will guide the modernization of the oversight and
regulatory function of the central bank to create an enabling environment that supports
innovation. Innovation in the payment system creates a healthy and competitive
environment, which provides benefits to both providers and customers.
4. To drive financial inclusion to meet the country’s commitment of 100% adults
financially included by 2020
The findings from Finscope 2016 revealed that about 68% of adults in Rwanda are formally
included (around 4 million individuals). This static includes banked and non-banked
formally included individuals. A key objective of the payment system is to move this
statistic upwards to achieve 100% financial inclusion by 2020. This document defines
financial inclusion as indicated by the G-20’s Global Partnership for Financial
inclusion (GPFI). GPFI defines financial inclusion along three dimensions – (a) access to
Vision
To build a cashless Rwanda through a world-class payment system that is secure, reliable,
efficient, scalable, innovative, and promotes financial inclusion.
32
financial services, (b) usage of financial services, and (c) the quality of the products and
service delivery. For more details, please refer to the annex.
5. To develop a payment system that is safe, reliable, and efficient for all participants
in the ecosystem
World-class payment systems must be safe, reliable, and efficient for all participants.
These attributes of the payment system build consumer confidence in the system, which
leads to increased patronage and overall development of the payment ecosystem.
4.3 The five strategies of the RNPS framework
The five strategies below have been developed to help the RNPS framework achieve its
objectives.
4.3.1 Strategy 1: Enhance the existing oversight, legal, institutional framework and
capacity of the national payment system
The legal and institutional framework of the payment system guides the management of payment
risks by the regulator, promoting the safety and efficiency of the payment system. The legal and
institutional framework also empowers the central bank with the ability to monitor existing and
planned systems and to adjust as necessary. To enhance the current legal and institutional
framework, the BNR will continue to enhance the human resources capacity of BNR staff and
other key industry stakeholders in the national payment system; review the payment legal
framework to adapt it to current market development; ensure continued collaboration within the
industry through the National Payment Council (NPC); and enhance collaboration among other
national and regional regulators. The enhancement of the legal and institutional framework will
help to address the need to develop a more comprehensive regulatory framework that provides
an enabling regulatory environment for existing and new providers in the national payment
system. The strategy is broken down into two sub-strategies, as follows:
Key strategies driving the payment system framework
1. Enhance the existing oversight, legal and institutional framework of the national
payment system
2. Facilitate the transformation of Rwanda into a cashless economy
3. Foster an enabling environment for innovation in the payment system
4. Promote access and inclusion in the payment system
5. Enhance the efficiency of the payment system
33
Strategy 1 1.A Enhance the oversight, legal
framework and capacity of the payment
systems department
1.B Enhance the payment
institutional framework
Table 7: Details of Strategy 1.A
Strategy 1.A Enhance the oversight and legal framework of the payment system
department
Strategic
approach
1.A.i Enhance human resources capacity of relevant regulators(BNR, RURA, CMA) and NIDA staff and other key industry stakeholders in the national payment system
1. A.ii Review existing legal framework
Critical Steps Empower regulators’ staff with
required knowledge to ensure adequate payment system oversight;
Review on a regular basis the ‘training needs’ in payment-related areas to identify gaps and areas for improvement;
Conduct an industry survey on key areas of the payment systems on which providers require further knowledge and training;
Participate in relevant international payment courses;
Regulators staff to be abreast of key developments in-country and globally.
Evaluate the payment system based on the standards and practices for low-value payment systems provided by the World Bank’s principles for national retail payment systems;
Articulate differentiated approaches to regulating PSP versus e-money issuers;
Ensure effective consumer protection and AML/CFT laws through enforceable legal framework;
Review laws or regulations to support e-commerce and new entrants in the industry;
Coordinate with industry stakeholders to develop minimum technology and data security standards.
Strategic Approach
1.A.i. Enhance human resources capacity in payment system
Regulators must keep up with the rapid pace of innovation and the risks that are introduced into
the payment system with new business models, channels, payment instruments, and providers.
This requires continually enhancing capacity of the relevant departments of the central bank and
other relevant regulators and agencies including but not limited to the ID authority, RURA, CMA
and other stakeholders in the industry to stay abreast of new innovations and business models.
This will also help regulators understand and effectively guide stakeholders on their existing and
future business and operations and risks, thus ensuring effective oversight.
34
Action steps:
i. Empower regulators’ staff with required knowledge to ensure adequate payment system
oversight. Specifically, training shall focus on the following area:
– Oversight framework for retail payment system;
– Digital Financial Services – particularly around supervision and consumer
protection;
– Cyber resilience and fraud mitigation in the financial sector;
ii. Review regularly training needs in payment-related areas to identify gaps and areas for
improvement;
iii. Conduct industry training survey on key areas of the payment system on which providers
require greater knowledge and/or training. Training on payment systems will include the
topics:
BIS Principles for Financial Market Infrastructures;
Digital financial Standards;
Cyber Resilience and fraud mitigation in the financial sector;
Digital Financial services – customer centricity, and data storage protection;
Establish forum related to fraud, security and standards.
Indicators 1. Number of trainings delivered in the following domains, that is industry identified as a knowledge gap:
a. BIS Principles for Financial Market Infrastructures; b. Oversight framework for retail payment system; c. Digital Financial services; d. Cyber Resilience and fraud mitigation in the financial sector; e. Digital financial Standards vs PCI_DSS standards and ISO
12812/2018 for MFS Standards, Series of ISO 27000; 2. Number of stakeholders’ forums on frauds, security and standards organized.
3. Number of stakeholders that participated in the above training.
Outcome
Improved capacity and capability of the BNR, RURA, NIDA, CMA and other key industry stakeholders in terms of understanding, application, and observance of standards – leading to better supervision and effective policy formulation that help in achieving the RNPS vision.
1.A.ii. Review the payment system legal framework to ensure it is sound, and promotes
certainty in the payment industry
The BNR has statutory responsibility to promote a sound financial system through
traditional prudential supervision of financial institutions and the oversight of payment
systems. BNR draws its mandate in payment systems from two key statutes, namely the BNR
Law (n. 55/2007 of 30/11/2007) and the National Payment Systems (NPS) Law (n. 03/2010 of
26/02/2010). Article 6 of the BNR Law empowers the central bank to supervise and regulate
payment systems. In addition, the NPS Law being the main legislation governing payment
systems in Rwanda authorizes the central bank to establish, own, operate and participate in the
ownership or operation of settlement, clearing and securities settlement systems. The legal
framework has explicit provisions for BNR’s mandate as catalyst, operator and overseer of the
35
payments systems in Rwanda. The National Payment Systems Law is supported by provisions in
other laws as well as various regulations, policies and rules, etc. issued by the BNR from time to
time.
BNR has signed MOUs with other regulators (CMA and RURA) to ensure better oversight of
financial market Infrastructures and payment services. Dynamic new channels, products and/or
business schemes have also modified the structure of the market and the provision of payment
services necessitating the review of the current legal framework. Retail payments is important for
the provision of payment services to the economy, most of them are of wide importance, and
hence their failure can widely inconvenience the population at large. Besides that, the current
regulatory framework does not allow relaxed requirement during a pilot phase to enable FinTech
companies to test innovative products leaving them with limited room for development. The
following action steps will be taken to enhance the oversight and regulatory framework:
Action steps:
i. Develop of a specific oversight framework for retail payments;
ii. Draft laws and regulations that address consumer protection through enforceable legal
structures covering all retail electronic payments infrastructure and payments, including:
− Regulatory requirements for full and clear disclosure of fees, fair treatment, and
effective recourse mechanisms. This should include disclosure of pricing prior to
transaction completion and should be followed up by notifications post successful
transactions, irrespective of payment instrument and method used.
− Standards for Quality of Service (QoS) and Quality of Experience (QoE).
− Drafting or enhancing laws that provide consumers with privacy and data protection
rights and recourse.
iii. Amendment of AML / CFT laws (where applicable;
iv. Develop a comprehensive cyber security framework that provides for a secure, reliable
and resilient payment system;
v. Establish activity-based oversight framework;
vi. Amend the payment system regulation to include payment gateways and aggregators;
vii. Develop a flexible regulatory framework (regulatory sandboxes) for innovative product
during the testing phase;
viii. Review relevant laws to support disruptive technologies like distributed ledger,
issuance of fiat cryptocurrency, and more;
ix. Monitoring of Over the Top (OTP) players: Monitor the OTP players in the market, review
products and services being offered, ensure compliance of consumer protection laws and
other applicable laws, make policy amendments if necessary. These OTP players could
be companies offering financial services through over the top apps like credit, micro-
insurance or issuing (third party) payment instruments.
x. Set standards and requirements proportionate to the risks they might trigger and the
impact on the national payment system in case of a disruption. Example: Open APIs, or
mitigating against the vulnerabilities of USSD channels and more.
Indicators 1. The oversight framework for retail payments is in place; 2. Amendment of the payment system law 3. Enhanced guidelines for providers on consumer protection; 4. Revised AML / CFT laws; 5. Comprehensive cybersecurity framework is in place;
36
6. Research on the potential of issuing fiat cryptocurrency has been conducted and evaluated;
7. Regulation on payment gateways and aggregators; 8. Minimum technology standards and data security standards, competition
rules, risk management framework, and anti-money laundering regulations.
Outcome Enhanced regulatory capacity that BNR and other regulators keep pace with
and can react to a rapidly changing environment;
Flexible regulation in place;
Strengthened legal framework and reduced legal uncertainty;
Regulatory enablement of payment products;
Promotion of innovation;
Improved level playing field between banks and non-banks in the payments industry.
Table 8: Details of Strategy 1.B
Strategy 1.B Enhancing the payment institutional framework
Strategic
approach
1.B.i Enhance domestic cooperation among stakeholders in the payment system to drive industry development.
1.B.ii Enhance collaboration between national and regional regulators.
Critical Steps Establish operational and legal
committees to support NPSC;
Conduct regular meetings among industry stakeholders to discuss needs and challenges of the market.
Strengthen collaboration with other national regulators to ensure alignment of the goals and objectives of the payment ecosystem;
Engage with other central banks in the region to align objectives for facilitating regional integration and cross-border transactions.
1.B.i Enhance domestic cooperation among stakeholders to drive industry development
Cooperation between stakeholders including regulators, service providers and users for the
development of payment system is very important. This requires close relationship between
regulators and participants in the payment ecosystem, including commercial banks, MNOs, and
PSPs, and open dialogue to identify priorities for payment system development. In this context,
the NPSC’s existing and continued cooperation between stakeholders in the payment industry is
critical.
Action steps:
i. The NPC to spearhead payment system development based on stakeholders’ inputs and
Rwanda’s overall economic development objectives; create industry working groups that
coordinate and cooperate to develop local standards, guidelines and policy changes;
37
inform stakeholders about on-going developments and challenges to drive innovation in
payments; and implement change.
Indicators Frequency / regularity of NPSC convening’s;
Frequency / regularity of meetings between the regulators, the government and stakeholders to address payment systems issues;
Active subcommittee to support the NPSC are in place.
Outcome Well-functioning NPSC
Strong relationships between stakeholders.
1.B.ii Enhance collaboration between national and regional regulators
Collaboration between national regulators in the region will facilitate the performance of the
payment landscape. Institutions including RURA and CMA are critical to align the objectives
towards development of the payment system and realization of the national vision. Additionally,
to facilitate the flow of payments, around cross-border trade, collaboration with other regional
regulators, particularly the EAC is important.
Action Steps:
i. Review the MOU between BNR, and RURA to strengthen the oversight of MNOs,
technology standards, Know-Your-Customer (KYC) requirements, data security issues,
competition, consumer financial protection, cross-border mobile remittances, and anti-
money laundering and combating the financing of terrorism (AML/CFT).
ii. Initiate MOUs with other regulators to ensure proper coordination of the oversight of
cross-border transactions.
Indicators Reviewed MOUs with National regulators (BNR, CMA and RURA);
MOUs with other regional regulators particularly in countries with established cross-border payments.
Outcome Improved national collaboration of payment systems.
Improved regional collaboration and integration of the payment ecosystem.
Critical success factors for strategy 1
1. Cooperation between national and regional regulatory stakeholders;
2. Adequate funding for training and capacity building initiatives to enhance knowledge and skills
of BNR, other regulatory staff and industry stakeholders;
3. Commitment of industry stakeholders to be active members of the NPC.
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4.3.2 Strategy 2: Facilitate the transformation of Rwanda into a cashless economy
Transitioning Rwanda towards a cashless economy requires digitizing the backend payment
processing and reconciliation infrastructure, increasing the footprint of transaction
infrastructure; leveraging government payment streams to facilitate growth in electronic payment
volumes, innovation in the retail payment space; leveraging government and private sector
initiatives to increase awareness and education of e-payments; and providing payments products
and services that meet consumers’ needs.
In addition to the above, it is important to note however, that elements like customer experience,
user-interface, convenience and costs (to both customer and merchant) are critical elements to
usage and can accelerate or impede the growth of digital payments.
The adoption of e-payments by citizens can help:
Build a transaction history to enable improved access to a suite of customized financial
products, thus deepening financial inclusion;
Reduce the risks and costs of carrying cash;
Reduce the costs of managing cash in the economy;
Reduce tax avoidance;
Deepen financial inclusion;
Reduce the impact of counterfeit money.
Table 9: Details of strategy 2
Strategy 2. Transforming Rwanda to a cashless economy
Strategic
approach
2. A Increase footprint of
electronic transaction
infrastructure
2.B Leverage government
payments to promote growth
and innovation in retail
payment infrastructure
2.C Increase awareness and education of e-payments among Rwandans and encourage innovative business models that offer a strong value proposition for merchants and consumers to use digital payments.
39
Critical Steps Increase digital payment acceptance density by several multiples;
Incentivize uptake of electronic payments;
Review taxation policy on payment acceptance points and transactions to reduce barriers to growth of digital payments;
incentivize e-payment-adoption by merchants.
Develop a cashless policy for government transactions, which includes digitizing the backend process of government services;
Ensure all payments by the government are made digitally:
Connect the national payments platform to Rwanda Online to support digitization of government collections (P2G and B2G);
Develop financial literacy strategy regarding e-pay;
Facilitate various government and private sector institutions to support and run campaigns on e-payments;
Encourage low cost
solutions and new
business models that can
accelerate payment
adoption:
Test and adopt
incentives that
encourage merchant and
consumer adoption of
payments.
Assess public confidence through period demand side surveys.
2.A Increase footprint of electronic payments infrastructure
To further build the electronic transaction infrastructure in the country, policies and guidelines will
be developed to stimulate investment and expansion of payment and acceptance touch points.
Majority of e-transaction touch points are currently located in Kigali, the objective will be to ensure
further penetration of these touch points into other provinces by encouraging private sector
investments in e-payment channels. Consolidated effort by the government, and payment
industry, in implementing the National Payment System Strategy can significantly raise demand
for retail electronic transactions, justifying private sector investment in the market.
Action steps:
i. In coordination with the industry players, devise a policy framework for a payment
acceptance ecosystem for electronic products and services that allows private sector
entities to play a significant role in expanding the payments infrastructure.
ii. Incentives and New Technologies:
a. Promote acceptability and incentivize usage of e-payments by merchants and
consumers;
b. Offer tax-credits / VAT rebates based on the volumes / value of electronic
transactions conducted by merchants and consumers.
c. Consider reducing applicable duties and taxes on smartphones and other types of
electronic payment acceptance hardware. Smartphones can act as payment
initiation and acceptance points eliminating the need for costly capex roll-outs by
the private sector.
iii. Allow non-banks such as e-money issuers and other PSP to access the retail transaction
switching providers;
40
iv. Encourage the private sector to leverage on new technology to introduce more affordable,
efficient and interoperable payment options such as proximity payment technology (QR
Code18, NFC19 devices, etc.).
Indicators 1. Number of electronic transaction touch points (POS, agents, NFC, QR code, and others) in the country as follows:
a. Increase electronic payment acceptance points. This could be physical, POS, mobile POS or virtual POS and others) from 21.6 per 100,00020 adults to 324 per 100,000 adults by year 2024 (15 times increase).
b. Increase agent penetration from 608 agents per 100,000 adults to 3,040 agents per 100,000 adults (5 times increase across the 7 years).
2. Increase value and volume of non-cash retail transactions conducted on the above-mentioned touch points from the current level of 20% of GDP to 80% of GDP by 2024.
3. 100% of banks and MFIs/SACCOs accounts provide mobile banking services by 2020.
4. Instant payment for MFS and Internet banking established by 2020;
5. M/POS and QR codes are introduced, standardized and interoperable.
Outcome Extensive touch points for electronic payment transactions.
Reduced demand for cash and commercial banks’ demand for central bank money.
Improved monetary policy.
2.B Leverage government payments to promote growth in retail payment infrastructure
Payments to and from governments are large volume transactions within any economy. These
payments are categorized as G2G (payments from one government agency to another), G2P
(conditional cash transfers, social benefits, pension/social security, income tax refunds, payroll
and incentives), G2B (corporate tax refunds, procurement of goods/services), P2G (taxes, tolls,
fines, government fees, and social security / pension contributions), and B2G (registration fee,
taxes). The use of non-cash electronic payment instruments for government payments
significantly improves cost savings at all levels of the national economy.21 The effective use of
G2P payments can also expand financial inclusion for unbanked segments by serving as the
gateway to other financial services.
Action steps:
i. Issue a cashless directive to mandate all government transactions to be paid
electronically including the acceptability of electronic proof of payment;
18 QR codes are machine-readable codes displayed from apps on a user’s phone that a POS can read to authenticate transactions with user information stored in the cloud. Merchants scan the code to start the transaction. 19 Near-field communication (NFC) is a wireless communication technology used to exchange data between a device and POS terminal. To make a payment, consumers place their NFC-equipped smartphone a few centimeters from the POS terminal with a NFC-tag reader. 20This is the current POS to person density ratio as NFC, QR code and other new technologies are barely existent, at the time of the
writing of this document. 21Cirasind, Massimo, et al. General guidelines for the development of government payment programs. Working Paper. Washington, D.C.: World Bank, 2012. Document.
41
ii. Digitize backend of payments to and from the government for all types of use-cases i.e.
digitization of payment processes that precede G2G, G2B, G2P, P2G, B2G payments.
iii. Leverage the Rwanda Online initiative to extend digitization to other government
services.
iv. Provide all G2P beneficiaries with remote access to their accounts by equipping
Umurenge SACCOS with required infrastructure;
Indicators Guidelines on government payments is in place.
Backend digitization of various payments to and from the government have been digitized to enable end-to-end remote payment process and transactions.
All payments to and from the government are conducted electronically.
National payments platform is connected to Rwanda Online.
Outcome Strengthening of retail payments infrastructure.
Significant cost reduction in administrative costs for payments to and from the government.
Substantial cost savings for cash management by the central bank.
2.C Increase awareness and education of e-payments among Rwandans, encourage
innovative business models that offer a strong value proposition for merchants and
consumers to use digital payments.
Financial awareness and education is a key activity that must be carried out in parallel to ensure
Rwandans have access to simple and easy-to-understand information on the various electronic
payment systems, products, and channels, including options for conducting transactions in a safe
and secure manner. The awareness and understanding of payments and the ease with which
they can be used is essential to move towards a cashless society.
Apart from education, poor adoption and usage of electronic payments could also be the result of
a lack of compelling value proposition or barriers to participation. An Example of a barrier would
be high Merchant Discount Rates (MDRs). A more necessary and urgent component however is
building a strong value proposition for merchant and consumer adoption of digital payments. This
could mean supplier financing and cash-flow financing offerings based on digital payment
acceptance, customer relationship management tools for merchants and more. It could also mean
consumer incentives like tax rebates on digital spending.
Action steps for consumer education and business models:
i. Collaborate with private sector players to deliver consumer education and financial
literacy programs on electronic payments for consumers and merchants;
ii. Improve public confidence through an adequate consumer protection framework
including a proper consumer complaints handling;
iii. Organize annual financial literacy programs / events (in communities, schools, colleges)
on payments channels and instruments;
iv. Incentivize merchants and consumers: Incentivize payments to be made electronically
- possible scenarios include rebates, loyalty and value-added services, and lottery
benefits;
42
o Explore lowering MDRs based on payment instruments, transaction amounts or
other models.
o Tax-credits based on volumes of digital payments accepted by merchants.
o Explore value added services that truly create a stickiness with digital payments.
o Lottery opportunity for customers based on digital receipts of payments made.
v. Encourage low cost solutions and new business models that can accelerate
payment adoption:
o This could include non-capital expenditure heavy models like standardized
interoperable QR code acceptance or audio QR codes or business models that
offer merchant working capital loans based on digital history or evidence of
accounts receivables.
vi. Carry out periodic demand side surveys (e.g. Finscope conducted every three years) and
conduct supply side analysis on data provided by the private sector to assess the level of
confidence in e-payments.
Indicators Customer Education
Financial literacy strategy on e-payments is in place.
Joint public awareness campaign on e-payments is carried out every year.
Number of advertisement and marketing campaigns run by providers.
Incentives, new business models
Pilots around new incentives for merchants and customers have been tested and inform policy.
New business models are piloted by the private sector and low cost digital solutions that provide a compelling value proposition to merchants are being adopted.
The number of merchants using e-payment increases from a 1000 in 2018 to 10,000 in 2020.
Periodic demand side surveys and supply side data analytics are conducted to understand the challenges and opportunities around adoption of e-payments.
Outcome Educated and financially-aware Rwandans.
Increased adoption of e-payments.
Critical success factors for strategy 2
1. Government of Rwanda’s commitment to drive electronic retail payment system uptake and
usage.
2. Buy-in of all government ministries, departments, and agencies on electronic payment and
disbursement.
3. Commitment of private sector stakeholders to invest in retail electronic payments infrastructure
and channels.
4. Commitment of government and private sector stakeholders to invest in financial literacy and
education initiatives for retail electronic payments.
43
4.3.3 Strategy 3: Foster an enabling environment for innovation in the payment system
Creating an enabling environment for innovation in the payments ecosystem will promote the
adoption of e-payments. Guided by the Rwanda National Payment System Framework and
Strategy (2008), the work done on creating the legal framework for payment systems and PSPs
has resulted in tremendous growth of electronic transactions in past years. This growth is
highlighted by the significant adoption of basic mobile financial services, which provide Rwandans
with access to store of value accounts for payments. Nevertheless, there is a need for a second
generation of products (such as micro savings, microloans, micro insurance and more), which
contribute to a financially inclusive economy. Additionally, although adoption of mobile wallets for
payments has increased, additional efforts to promote usage are still required. The dynamic
advances in information and communication technology have ushered in a raft of new products
in the field of payment systems.
In order to foster innovation and attract more investment, it is necessary to highlight successes,
publish reliable data to support the business case for potential opportunities, and encourage
partnerships between the private and public sectors.
Table 10: Details of Strategy 3
Strategy 3.Foster an enabling environment for innovation in the payment system
Strategic
approach
3.A Enhance
collaboration
between
stakeholders while
promoting
competition.
3.B Utilize regular
research and surveys to
measure and inform
stakeholders on the
development of payment
system.
3.D Support Fintech companies promote innovations that allow for better access, adoption and usage of financial services and products.
Critical
Steps
Interoperability: Examine the current state of interoperability and evaluate business models that can sustainably accelerate the flow of funds across all payment instruments.
Open Application
Programming
Interfaces (APIs): Drive competition, innovation and collaboration between banks, non-banks and other third parties through policies and business models
Conduct regular research/surveys for new product development, market segmentation and customer outreach
Build a repository database of industry data through EDWH.
Compile, analyze, and publish the de-segregated statistics along with the state of payment systems.
Fintech accelerator / incubator established to support innovation.
Support Fintech start-ups through an Innovation Fund.
Facilitate Fintechs to develop proof of concept and market test solutions.
Provide technical assistance to local Fintechs.
44
that allow for open, secure and reliable exchange of information.
Data / Mobile
Number
portability: Drive competition, innovation by encouraging mobile number portability after careful considerations of the implications on quality of services and experience of the end customer.
3.A Enhance collaboration between stakeholders to promote network effects, while
encouraging competition
The BNR will facilitate cooperation and collaboration among the industry stakeholders to discuss
and provide solutions to the challenges in the national payment system. The purpose of the
industry-wide convening will be to evaluate, advance and monitor the state of interoperability,
product and services offerings, trends, and developments in the payment ecosystem, and their
implications for the continued development of national payment system.
Action steps:
i. Examine the current state of interoperability and evaluate business models that can
sustainably accelerate the flow of funds across all payment instruments;
ii. Collaborate with industry and applicable regulators to build industry capacity,
encourage dialogue that encourage competitive practices that spark innovation e.g.
Open APIs
iii. Explore the potential of number and data portability and its impact on the consumer’s
digital financial history;
Indicators No. of providers are offering Interoperable payment solutions.
No. of interoperable use-cases in the market.
No. of financial institutions and non-financial institutions securely opening APIs to the market for development of innovative products and solutions.
Harmonization of APIs among financial service providers enabling products and services to scale.
Feasibility study that evaluates the implications of number portability on the financial history of consumers and suggests a way forward.
Outcome Increased offering of relevant products and service in the market. This may
include but not be limited to savings, credit, insurance, investment, retail payments, and remittances products.
45
3.B Utilize regular research and surveys to measure and inform stakeholders on the
development of payment system
The dynamic nature of the payment system landscape requires it to be frequently assessed to
ensure that payment services and products meet consumers’ wants/needs; new risks are not
introduced into the system; and providers’ activities are compliant with regulatory rules and
conditions. Periodic nation-wide research and surveys will be conducted to assess the level of
developments of the payment system and potential areas for growth and innovation to drive
informed decision making by stakeholders of the payment systems.
Action steps:
i. Conduct regular research/ surveys to understand challenges and new opportunities in
the market that informs better product development and service offerings, market
segmentation and customer outreach.
ii. Coordinate with industry stakeholders and development partners who are willing to
invest in providers that want to test and scale innovative solutions.
iii. Utilize findings of the research on the level of development of payment ecosystem to
guide stakeholders on their operations in the national payment system.
Indicators Periodic (every 3 years) statistically relevant demand side surveys to assess the level of adoption of e-payments, reliability and security of payment systems and areas of growth and innovation.
No. of providers are offering Interoperable payment solutions.
Outcome Introduction of innovative products and services
Increased adoption of retail electronic payments
Improved reliability and security of the payment system
3.C Support Fintech companies to promote innovations that allow for better access,
adoption and usage of financial services and products.
Cooperation between public and private sector will facilitate partnership that will develop the
payment industry, notably DFS. With the advent of new technologies with immense potential to
transform the way financial market participants operate, conduct transactions; transfer, store and
maintain ownership records of digitized assets and perform reconciliation and settlement.
Action steps:
i. Facilitate collaboration between private and public sectors to develop innovative retail
payment solutions that are driven by DFS;
ii. Establish a Fintech accelerator / incubator;
iii. Support start-ups through the establishment of an Innovation Fund;
iv. Facilitate Fintechs to develop proof of concept and market test (sandbox);
v. Provide technical assistance to local Fintechs;
46
vi. Work with the industry to assess the potential of disruptive technologies (e.g. distributed
ledgers) and explore how they can be used to digitize payments, make them more secure
and promote financial inclusion.
Indicators An innovation fund is established.
Fintech accelerator is established.
A pipeline of Fintechs have been identified.
Number of proof of concepts initiated.
Outcome Innovative payment products and services, that increase competition and
accelerate the adoption of digital payments.
Critical success factors for strategy 3
1. Cooperation between industry stakeholders and regular dialogue on payment systems
infrastructure development and expansion.
2. Industry cooperation and adherence to regulators’ rules on data and statistics reporting.
3. Adequate funding for periodic research and surveys.
4.3.4 Strategy 4: Enhance access to and inclusion in the national payment system
Majority of Rwanda’s population resides in rural areas and is currently served by SACCOs, as
well as other institutions such as Accumulated Savings and Credit Associations, Rotating Savings
and Credit Associations, and Village Savings and Lending Associations. Although MFS providers
are actively spreading their agent network in the same areas, the services provided via agent
networks are only a subset of financial services (cash-in, cash-out, bill payments, and transfers).
On the other hand, SACCOs offer a wider range of financial services, such as access to savings
accounts, and credit, which have the potential to significantly improve the socio-economic status
of their members/customers, specifically women and youth. Currently, most of the SACCOs are
lagging in basic ICT infrastructure. Enhancing financial inclusion will require upgrading last-mile
financial access infrastructure – particularly MFIs and SACCOs.
In addition to basic digital payment service, there is a need to offer value-added services that
meet the day-to-day payment needs of consumers. Non-bank financial institutions such as
insurance companies should be encouraged to offer products such as micro-insurance that can
further financial inclusion.
Furthermore, there is a need to create an enabling environment for the uptake of e-payments.
Establishing pricing structure to ensure affordability of these services for the mass market is a
key element. The government does not intend to set prices of e-payments products or services,
or the price of payment systems or channels. However, the e-payment ecosystem in Rwanda is
still in the development phase and therefore requires an industry-led approach to develop
parameters for access to and pricing for e-payment systems, channels, products, and services.
47
Table 11: Details of Strategy 4
Strategy 4. Enhance access to and inclusion in the payment system
Strategic
approach
4.A. Facilitate wider access to payment systems and ensure access is provided on an objective, risk-based, and open basis
4.B. Adapt a pricing structure for various payment instruments that enhance affordability, fair pricing, and transparency in the market
4.C. Provide payments products and services that are affordable and meet consumers’ needs
Critical Steps Ensure a fair and non-discriminatory access to payment infrastructure (for example USSD access)
Facilitate MFI, and SACCOs and E-money issuer to participate in National Payment and Settlement system;
Allow e-money issuers to access retail transaction switches
Carry out a study to review the pricing structures of various payment instruments and channels
Develop database of prices for payment services
Establish a platform that allows easy comparability of prices
Boost DFS through the development of value-added services
Develop DFS to access financial services such as savings, loan disbursements, and other payment services’
Increase the penetration of individually owned, affordable smart phones in country
48
4.A. Facilitate wider access to payment systems and ensure payment system operators
provide access on an objective, risk-based, and open basis
The participation of MFIs and SACCOs in the national payment system is critical for financial
inclusion goals, as they connect the rural/underbanked segment to the urban banked population.
Computerization of Umurenge SACCOs through a shared IT platform will complete the
prerequisites for their participation in the payment system. Nevertheless, access to the payment
system will be based on an objective, risk-based, and open basis. E-money issuers play a role in
modernization of payment system and should participate fully in it by accessing the switch as
interoperability is very key in cashless society creation.
Action Items:
i. Ensure fair and non-discriminatory access to payment infrastructure (for example, USSD
access);
ii. Facilitate MFI, and SACCOs and E-money issuer to participate in National Payment and
Settlement system;
Indicators Number of non-Bank MFI and SACCOs with access to the National Clearing and Settlement systems.
Access to retail transaction switches by e-money issuers.
Outcome Payment systems will be accessible to all the institutions (banks, PSPs, non-bank
MFIs, and SACCOs), thus promoting the financial inclusion goals of Rwanda.
4.B. Adapt the pricing structure for various payment instruments to enhance
affordability, fair-pricing, and transparency in the market
In consultation with the industry, regulators will review and adapt the existing and future pricing
of e-payments to the customers and access to payment system and channels for businesses and
providers to determine if pricing and costs are relevant to the market realities and the stage of the
National Payment System development. As the payment ecosystem develops and reaches a
certain level of maturity, the pricing structures will be reviewed on regular basis.
Action steps:
i. Carry out a study to review the pricing structures of various payment instruments and
channels;
ii. Develop database of prices for payment services;
iii. Establish an electronic platform that facilitate price transaction across the industry.
49
Indicators Commission study on pricing of various payment instruments and channels.
Database of prices for payment services
Platform for price comparison is in place
Outcome Affordable payment products and services available to end users
Public is informed about the pricing.
4.C. Provide payments products and services that are affordable and meet consumers’
needs
There is a need for a diverse range of payment products and services to serve the different
segments of the Rwandan population. For example, 73% of Rwanda’s population is employed in
the agriculture sector and there is an opportunity for providers to develop sector-specific products
that could result in increased penetration and uptake of e-payments. In addition to the basic
payment services offered on DFS platforms, there is a need to offer value-added services that
meet the day-to-day payment needs of consumers.
Action steps:
Boost DFS through the development of value-added services and compelling digital
financial service products and payment use-cases;
Increase the number of individually owned smartphones in the country.
Indicators Individually owned feature and smart phones in the country
High quality internet coverage across the entire country.
Number of VAS to payment services.
Outcome Affordable payment products and services available to end users.
Number of VAS or products that are tailored to various customer segments.
Critical success factors for strategy 4
1. Transparent, inclusive, fair and consultative approach to inclusion and participation, which
takes the interest of all stakeholders into account.
2. Nearly universal high quality internet and electricity penetration – it is key to increase the
utility and stickiness of smartphone adoption.
3. Close collaboration between the Government, development partner and the private sector.
4.3.5 Strategy 5: Enhance the efficiency of payment systems
Rwanda has achieved several key milestones since the Rwanda National Payment System
Framework and Strategy (2008) was developed. The modernization of the payment system was
undertaken with the objective of speeding-up the clearing process of interbank payments and
facilitating movement from cash-based to non-cash based payments.
For retail payments, Rswitch, MasterCard and Visa offer services through which interoperability
is achieved between most of the deployed ATM and retail POS. However, with the introduction of
MFS through PSPs, there is a need to further enhance and promote integrated and interoperable
payment systems towards the achievement of a cashless economy. Hence, the following strategic
50
approaches will be taken to enhance existing payment systems: ensure reliability and robustness
of the e-payment infrastructure; promote a standardized, interoperable, and integrated payment
system; promote efficiency of RIPPS’ processes and clearing and settlement system; and improve
operational efficiency in the payment ecosystem.
Table 12: Details of Strategy 5
Strategy 5 Enhance existing payment systems
Strategic
approach
5.A Ensure reliability and robustness of the e-payment infrastructure
5.B Promote efficiency in national payment and settlement system for clearing and settlement
Critical Steps Develop a directive establishing
standards for technological infrastructure and security of e-payments (cards and MFS)
Define and monitor standards for communication and network infrastructure to ensure minimum standards of service
Enhance national data coverage to support e-/m-commerce
Audit routinely the systems and processes for e-payments by payment services providers
Enhance IT and operational controls regarding payment systems, information security risk management
Establish a real time clearing for low value to support the instant payment through MFS and internet banking
Improve the RIPPS efficiency by migrate from ISO 15002 to ISO 20022
Continuously improve upon BNR's operation and oversight of RIPPS in line with the Principles of PFMIs
Ensure that all interoperable transactions between banks and/or PSPs are settled via RTGS
Implement cheque capping guideline to move high-value transactions to RTGS
Conduct a bi-annual review of all RIPPS components to ensure that the system and its processes (will) meet existing and future expected volumes
51
5.A. Ensure the reliability and robustness of electronic payment infrastructure
The acceptance of e-payments is directly proportional to the trust of consumers in electronic
modes of payments. A reliable and robust payment infrastructure ensures that consumers feel
the same level of access to their money as they have with cash. Unavailability of payment services
due to weak infrastructure (networks and systems) erodes the trust of consumers in the reliability
of e-payments. Since e-payments rely on technology infrastructure, it is important to set minimum
standards and guidelines for technology used by payment system providers and participants
across the electronic payment value chain.
The BNR will continue to enhance its oversight function to monitor the availability and
performance of electronic transaction touch points.
Action steps:
i. Ensure data coverage is enhanced at the national level to support e/m-commerce;
ii. Define minimum common standards for IT and technology infrastructure requirements
for institutions seeking to offer e-payments. The requirements will not be prescriptive in
terms of technology selection, but will at least set minimum standards that impact the
overall usage of e-payments. For example, standards would address:
Use of redundant links when connecting to retail payment systems
Presence of a primary and disaster sites
Availability of a comprehensive Business Continuity Plan (BCP)
Conducting and reporting on a disaster recovery drill at least once a year to
check preparedness in case of disasters
iii. Define and monitor standards for communication and network infrastructure to ensure
minimum standards of service;
iv. Routinely audit the systems and processes of electronic payment services providers;
v. Define minimum common standards of security for electronic payments, including for
card based payment (CPI-DSS) and MFS (ISO 12812);
vi. As e-payments grow and different institutions offer such services, the BNR will develop
guidelines for information security, electronic banking risk management, and fraud
monitoring;
vii. Establish a cyber resilience program to improve and test resilience to cyber-attack in the
financial sector. The program will be based on the National Cyber Security Strategic
Plan.
viii. Adoption of ISO 12812 for MFS standards
Indicators Defined standards for communication and network infrastructure
Improved 3G/4G data coverage at the national level
Establishment of a cyber resilience program based on the national cyber security strategic plan.
Two security audits a year by internal audits of payment services providers
Bi-annual security audit by all payment services providers by external auditors
Outcome Well-functioning and reliable payment systems.
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5.B. Promote efficiency of the National Payment and Settlement system.
The role of RIPPS is central in creating a robust and reliable national payment system. RIPPS,
through its different components, facilitates not only large-value transactions, but also has an
important role in the clearing and settlement of transactions between participants of retail payment
systems. With the exponential growth of mobile-based transactions and future adoption of
interoperable transactions for DFS, it is important to ensure that the RIPPS is ready to efficiently
and effectively handle the additional volume for clearing and settlement of these transactions. The
BNR will continue to maintain and invest in the RIPPS to ensure on-going compliance and
effective risk management.
ISO 20022 is becoming a global message standard and will support global interoperability.
Action steps:
1. Establish a real time clearing (straight through processing) for low value to support the
instant payment through MFS and internet banking;
2. Open access PSPs to Rwandan Payments Systems to enable them to be competitive and
innovative without compromising the resilience and security of the payments
infrastructure; Enhance data through the adoption of ISO 20022to give customers more
and better information about their payment;
3. Continuously improve efficiency of payment and security systems through regular
assessment against the Principles of FMI22;
4. Conduct a bi-annual review of all components of RIPPS to ensure that the system and its
processes are ready to meet existing and future expected volumes
Indicators The Real Time Clearing for low value is established
MFIS, SACCOs and EMIs are connected to National Payment System
Bi-annual assessment report of RIPPS and Payment systems
ISO 20022 is adopted and implemented by 2020
Outcome Improved customer convenience.
Critical success factors for strategy 4
1. Commitment and will of payment system providers to interoperate
2. Adherence of providers to BNR standards and regulations
22Bank of International Settlements. Principles for financial market infrastructures. Report. New York: Committee on Payment and Settlement Systems, 2012. Document.
53
Annex I: Implementation plan / performance indicators Attached Excel document with details.
Annex II: Consultative Process for the RNPS The Rwanda Payment System Strategy
serves as a guide for the Rwanda Payment Industry, including regulators, public and private
sector players to promote the continued development and modernization of the Rwanda Payment
System (RPS). The objectives and goals of the Strategy are in line with and crucial to meeting
the economic targets indicated in various national strategic plans, including Rwanda Vision
2020/2050; Economic Development and Poverty Reduction Strategy II 2013 - 2018 (EDPRS II);
and Financial Sector Development Program II (FSDP II) 2012. Specifically, the framework and
strategy will guide the Government of Rwanda and industry stakeholders to lead and contribute
to the following:
6. Accelerate the rate of economic growth and empower Rwandans towards meeting the
country’s vision of attaining middle-income status.
7. Drive financial inclusion to meet the country’s commitment of100% of adults in the formal
financial system by 2020;
8. Facilitate a cashless economy by promoting e-payments;
9. Create an interoperable payment landscape with an enabling environment for product and
service innovation, which provides affordable payment services to Rwandans;
10. Develop a payment system that is safe, reliable, and efficient for all participants in the
ecosystem.
The development of the National Payment System followed the World Bank’s guidelines for the
establishment of a comprehensive strategy for national retail payments, as well as the guiding
principles and best practices provided by the Bank for International Settlements (BIS) Committee
on Payments and Market Infrastructure (CPMI). The strategy development process also included
a comparative analysis between Rwanda’s payment system and those of its counterparts in East
Africa and other international markets. A consultation program was completed to engage a wide
variety of stakeholders, including financial institutions, mobile network operators (MNOs),
regulators, and public institutions to validate the strategic direction.
54
The consultation process provided insights into the challenges and gaps in Rwanda’s current
payment system, which are summarized as follows:
1. A regulatory framework that does not entirely meet the needs of the emerging payment
system landscape: current laws and regulations especially those related to the retail
payment were established in the 2010. The development of innovative payment solutions,
new channels, products and/or business schemes, in the meantime has modified the
structure of the market and the provision of payment services;
2. Limited interoperability between providers, specifically in POS and mobile financial
services (MFS) systems, which restrains the operational and economic efficiency of the
national payment system;
3. Cash-dominated economy;
4. Gaps in network infrastructure;
5. Low uptake of electronic government payments especially Person-to-Government (P2G)
by respective government bodies;
6. Low consumer access to financial services including electronic transactions and
payments.
After assessing the current state of the National Payment System and synthesizing the
information and insights collected from the industry, the payment system stakeholders set-forth
the vision for the Rwanda Payment System (RPS), as well as a clear strategic framework to reflect
the dynamic payments landscape and to respond to the evolving needs of the payments industry.
Annex III: Achievements of RNPS to-date In 2008, the National Bank of Rwanda (BNR) established a vision and strategy for the Rwanda
National Payment System (RNPS). The vision and strategy guided the implementation of the
Rwanda Integrated Payment Processing System (RIPPS), the various components of which were
implemented in 2011. The RIPPS is comprised of the Automated Transfer System (ATS), which
includes the Real Time Gross Settlement System (RTGS) and Automated Clearing House (ACH).
The RIPPS also includes the Central Securities Depository (CSD), which is designed to provide
efficient depository services to various players in the financial market. Additional details on the
components of the RIPPS are included below in Section 2.0. Overview of the Rwanda National
Payment System.
Since the establishment of the strategy and the implementation of the RIPPS, the Rwandan
payments landscape has progressed substantially (see Table 13). Specifically, retail electronic
payments (e-payments) have been significantly impacted by advancements in the RPS, recording
a 1027% increase in transaction value from RWF 12.36 billion in 2011 to RWF 1396 billion in
201623. Developments in the RNPS have also benefited from various national initiatives and
macroeconomic conditions, including the transformation of the Information and Communication
Technology (ICT) landscape, modernization of the BNR’s legal and regulatory framework, and
rapid economic growth in the country.
23National Bank of Rwanda, MPFS February 2016. .
55
Table 13: Highlights of the Rwandan Retail Payment Landscape 2008-2016
2008 2018
There were various regulations that
impacted the payment system, but there was
no specific legislation regulating the
payment system itself. Existing legislations
included: the BNRLaw; Banking Law;
Cheque Decree of 1951; Promissory Note
and “Bill of Exchange” law; Anti Money
Laundering Law; 1989 Clearing House
Rules and Regulations that provide for the
clearing and settlement of cheques, credit
transfers, and other types of payment
instruments based on paper documents.24
The legal framework for the Rwandan national
payment system is fairly comprehensive with the
following laws and policies in place: 2009 Law
governing Negotiable Instruments; 2009 Prime
Minister’s Order Establishing the National
Payment System Council; 2010 Payment
System Law; 2015 Regulation on the Licensing
Criteria of Operating Payment and Securities
Settlement System; 2010 Regulation on
Oversight of Payment Systems and the
Activities of PSPs; 2010 Regulation on
Electronic Fund Transfers and Electronic
Money; 2010 Law relating to Electronic
Messages, Electronic Signatures and Electronic
Transactions; 2015 BNR Regulation governing
Payment System Providers; 2013 Regulation on
cheque Truncation, which enables electronic
cheque presentment, truncation, and imaging;
the 2016 regulation governing electronic money
and the 2018 regulation governing agents and
regulation governing operations of CSD
Participants in the payment system included
seven commercial banks, one development
bank, and one housing bank
Participants (both direct and indirect) in the
payment system include 11 commercial banks,
five microfinance banks, Rwanda Development
Bank, three mobile network operators (MNOs),
six remittance companies and 3 system
operators
Cash was the predominant payment
instrument
Cash is still the predominant payment
instrument, but uptake of e-payments has grown
rapidly and now constitutes 22.6% of the
country’s GDP from 3% in 2011.
All interbank payment systems (clearing and
settlement) were semi-manually processed
in paper form and the settlement of clearing
house balances were posted in the National
Bank of Rwanda (BNR) accounting system
The Rwanda Integrated Payment Processing
System (RIPPS) includes the Automated
Transfer System (ATS) and Central Securities
Depositories (CSD); the ATS is comprised of the
RTGS and ACH
SIMTEL Switch (now RSwitch) offered card-
based services through Automated Teller
Machines (ATMs)
Visa, MasterCard and RSwitch offer card-based
services through both ATMs and point of sale
(POS) for their member banks;
24BNR National Payment System Framework and Strategy 2008
56
2008 2018
There were 23 ATM machines in the
country; penetration was 1ATM per 400,000
inhabitants
There are over 400 ATMs, representing 7 ATMs
per 100,000 adults
There were 120 POS devices, of which only
20 were active; penetration was 1 POS per
75,000 inhabitants
There are 1,885 POS devices, representing 31
POS per 100,000 adults
Further development of the RNPS will be important to meet the targets indicated in various
national strategic plans, including: Rwanda Vision 2020/2050; Economic Development and
Poverty Reduction Strategy II 2013 - 2018 (EDPRS II); and Financial Sector Development
Program II (FSDP II) 2012. The payment system is crucial to achieving the Government of
Rwanda’s strategic objectives, which are to progress from a low-income country to a middle-
income country, and to increase from adult population in the formal financial services (Finscope
2016) system from 68%25to 100% by 2020.26 Another important objective is to promote a cashless
economy by reducing the use of cash payments in both public and private sectors, and to increase
e-payments in the retail segment of the economy.
A robust, resilient national payment system is critical to achieving the above-mentioned objectives
and the Government is committed to advancing a payment system that fosters growth in the
economy at large. The payment system drives growth in the economy by speeding-up the clearing
process of interbank payments, facilitating the growth of e-payments, providing the environment
for innovative payment solutions, and ensuring that payment products and services are
affordable, safe, and effective for the end user.
To maintain the momentum towards the further development of the RPS, a visioning and strategy
exercise was commissioned to develop the National Payment System Framework and Strategy,
which builds on the achievements of the Rwanda National Payment System Framework and
Strategy (2008). The decision to update the national payment system strategy was also based on
the findings of research conducted in September 2014 to investigate the key challenges limiting
the uptake of e-payments in the country.27 A key finding from the research was the need for the
Government to enhance and develop its existing strategy to facilitate the development of a robust
and forward-looking national payment system given the changes in the Rwandan payment
landscape since the first strategy plan was developed in 2008.
In defining the National Payment System Strategy, the strategy development process followed
six guidelines for creating a comprehensive strategy for national retail payments.28
25 Finscope 2016 26 AFI Global Policy Forum. Commitment made by the National Bank of Rwanda. Maya Declaration. Riviera Maya: AFI, 2011. <http://www.afi-global.org/library/publications/maya-declaration-commitment-made-national-bank-rwanda>. 27Access to Finance Rwanda (AFR). Electronic Payment: Research on Electronic Payment Usage in Rwanda. Brief.
Kigali: AFR, 2014. <http://www.afr.rw/index.php/publications/E-payments%20summary%2020%2001%2015.pdf/detail>. 28 World Bank. Developing a Comprehensive National Retail Payments Strategy. Washington D.C.: World Bank, 2012.http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/282044-1323805522895/Developing_a_comprehensive_national_retail_payments_strategy_consultative_report(8-8).pdf
57
These guidelines were adapted from the Committee on Payments and Market Infrastructures
(CPMI)-World Bank General Principles for International Remittance Services based on various
studies and research conducted by the World Bank’s Payment Systems Development Group
(PSDG), CPMI, and other international and domestic organizations. The six guidelines are shown
in the text box below.
58
World Bank’s Guidelines for Developing a Comprehensive National Payment System Strategy
1. The market for retail payments should be transparent, have adequate protection of payers and payees’
interests, and be cost-effective.
2. Retail payments require reliable underlying financial, communications and other types of infrastructure.
These infrastructures include an inter-bank electronic funds transfer system, an inter-bank card
payment platform, credit reporting platforms, data sharing platforms, large value inter-bank gross
settlement systems, availability of robust communications infrastructure, and also a national
identification infrastructure.
3. Retail payments should be supported by a sound, predictable, non-discriminatory, and proportionate
legal and regulatory framework. The legal framework for a national payment system should set forth
the rights and obligations of the parties in the system (including the regulator, participants, payment
providers, and customers); the transfer procedures and resolution of disputes regarding payment
instruments and payment services; and the resolution of disputes with respect to such instruments,
services, provider arrangements and governance procedures for transferring and settling obligations
with finality.
4. Competitive market conditions should be fostered in the retail payments industry, with an appropriate
balance between cooperation and competition. Central banks must ensure that policy objectives with
regard to competition in the market for retail payments are clearly communicated and transparent to
stakeholders. The oversight function of the regulator should include the monitoring of various aspects
related to anti-competitive behavior; Central Banks should facilitate institutional mechanisms to
promote cooperation and information sharing.
5. Retail payments should be supported by appropriate governance and risk management practices.
Collaboration between stakeholders and the Central Bank is paramount to effective governance and
risk management practices. All service providers should be subject to mechanisms of accountability
and independent oversight, including independent audits, to ensure they are pursuing such long-term
interests. Management of services providers should establish internal controls to mitigate the risks it
decides to accept.
6. Public authorities should exercise effective oversight over the retail payments market and consider
direct interventions where appropriate. Although the overall oversight function of the payment
landscape should be led by the Central Bank, collaboration between the Central Bank and other key
public authorities is critical to an effective oversight function of the retail payment landscape.
59
Annex V: Pillars of a Robust National Payment System The development process for the National Payment System Framework and Strategy was based
on six key pillars, which represent the foundation for a robust national payment system. The
consideration for these pillars was based on ensuring that the national payment system strategy
is consistent with the Bank for International Settlement (BIS) – CPMI Principles for Financial
Market Infrastructure (PFMI) and the World Bank’s guidelines for Developing a Comprehensive
National Retail Payments Strategy.
The six pillars include:
1. Human resource capacity of the payment industry
The capacity of all stakeholders in the payment industry including financial service
providers, financial intermediaries and regulators is critical for ensuring safety and
efficiency of payment services and systems. The capacity of regulator is key to ensure the
proper execution of oversight function in line with best practice. It is crucial as well that the
stakeholders understand and plan for existing and new products/services and
technologies and understand and anticipate potential risks; and adjust or develop the
payment products accordingly.
2. Framework for oversight and regulation
A robust framework for oversight and regulation ensures that the objectives of safety and
efficiency are promoted in the payment system. The framework provides rules and laws
that reflect best practices in clearing and settlement arrangements; promotes innovative
business models, product, and services; and encourages the emergence of new providers
in the payment system.
3. Communication and knowledge sharing within the payment ecosystem
Effective communication on payment system developments enhances the understanding
of the participants of the major developments both in the local and international payment
landscape. Communication facilitates knowledge transfer and therefore promotes healthy
competition within the payment industry.
4. Growth of e-payments
Growth of e-payments presents a significant opportunity to reduce costs, improve
processing speeds, and expand payment-related services. Proliferation of e-payments in
the economy is beneficial to the ecosystem because it facilitates efficient financial
management systems for central banks and financial institutions, improves transparency
in fund management by public and private organizations, and increases labor productivity
rates, which would have otherwise been lost to managing cash- and paper-based
transactions.
5. Efficient payment systems and processes
Payment system efficiency promotes innovation, interoperability (local, regional and
global), and competition. Common standards also improve processing speeds and reduce
transaction costs.
60
6. E-payment infrastructure and technology
The infrastructure of the payment system, which comprises front-end and back-end
infrastructure, payment and settlement rules, dispute resolution processes, computer
systems, computer networks, computer processing capacity, and an integrated financial
network (communications network or mechanism facilitating financial transactions and
information transfer) is a critical component of the system. Payment infrastructure and
technology can introduce significant risks into the payment system if not properly
monitored.
61
Annex VI: G-20 Financial Inclusion Indicators
62
Annex III: G-20 Financial Inclusion Indicators (contd..)
63
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